- AppHarvest, a developer and operator of large greenhouse farms, is merging with Novus Capital, a publicly traded special purpose acquisition company (SPAC), the companies said in a statement. The merger with what's known as a blank-check company will allow AppHarvest to go public and list its stock on the Nasdaq. The company will be led by Jonathan Webb, AppHarvest’s founder and CEO.
- The transaction will provide $475 million in gross proceeds to AppHarvest and value the new company at $1 billion. AppHarvest also said Peter Halt, who has several years working at publicly traded companies as a CFO, will assume the same post at the greenhouse operator.
- AppHarvest recently opened one of the world’s largest indoor farms in Morehead, Kentucky. The first items expected to be harvested from the 2.76 million square-foot-facility will be tomatoes in early 2021.
Few spaces in food have been seeing as much green lately as indoor farming. Just days before AppHarvest announced this merger, competitor Revol Greens raised $68 million in a funding round to finance its growth. Together, AppHarvest and Revol have raised nearly $400 million.
The financial activity inundating the indoor farming sector is indicative of increasing consumer need for locally grown produce and interest in eating healthier — trends that all have gained momentum during the pandemic.
AppHarvest's Kentucky facility will eschew the outdoor fields typically associated with agricultural production, instead embracing controlled-environment agriculture with sprawling glass-enclosed greenhouses. They will use rainwater to grow non-GMO and chemical-free food. Webb told Food Dive last year the Kentucky location of the greenhouse will allow produce to get to about 70% of the U.S. population in one day's drive, including consumers in Washington, D.C., New York, Philadelphia and Boston.
"It doesn't matter if you're on the left or the right side of the aisle, it's unacceptable that food gets trucked five days in this country to make it to a plate," Webb told Food Dive last year. "That's not good for anybody. It's not good for the environment. It's not good for the quality of the food itself."
By going public through a SPAC, AppHarvest will raise nearly $500 million, which the fast-growing upstart can use to fund active development plans for more large-scale indoor controlled environment farm projects. And since AppHarvest already has distribution agreements in place, the company has a revenue stream coming online in just a few months that could at least partially help fund its growth.
A deal with a blank-check company is common in the food business. Hostess Brands, which is now publicly traded, was acquired through this type of investment vehicle in 2016, four years after it exited bankruptcy. And 100-year old snack maker Utz recently came public after it did the same thing. A blank-check company is created by an entity raising funds with the goal of merging or acquiring another business. For companies they acquire, it's usually a faster and cheaper way of going public.
Keeping the passionate Webb, who has run the company since its inception, as CEO is crucial to what has made AppHarvest an early success and enabled to grow as quickly as it has.
While Webb is intimately familiar with AppHarvest, he is going to great lengths to surround himself with seasoned executives who have more expertise overseeing growth and the finances of large or fast-growing companies. As part of its funding round announced earlier this year, AppHarvest added Impossible Foods' CFO David Lee to its board. The addition of Halt, who has several years working at publicly traded companies as a CFO, will further strengthen the company's executive bench.
AppHarvest has had a busy and largely successful 2020, but it all has been done as a private company. The decision to go public will further open up its finances to the world. There is no question AppHarvest is growing, but the company is still very young and will need significantly more cash to open more greenhouses to gain scale or reach profitability. For now, investors are buying into the promise of what the future holds — which for now is promising, but far from certain.