SALEM, Ohio – Farm Credit Services of America owes its proposed buyer $10 million after breaking a merger agreement this fall.
Dutch-owned Rabobank was set to buy the Farm Credit agency for $750 million when Farm Credit pulled out in October.
Paul Folkerts, the agency’s chairman, said rather than extending negotiations over the agreement, it was better to “settle all outstanding issues with Rabobank.”
Farm Credit Services of America, which serves farmers in Nebraska, Iowa, South Dakota and Wyoming, will pay four installments of $2.5 million over the next year.
Rejection. The bank’s board of directors rejected the offer Oct. 21, saying they were afraid of a lengthy approval for the transaction. The directors also said their funding source, AgriBank, changed its funding procedures after the acquisition announcements.
The $750 million deal captured critics’ attention shortly after it was announced in late July. They argued the sale wasn’t in farmers’ interests and would set a precedent that Farm Credit agencies could be easily bought and sold.
The overarching Farm Credit System includes more than 100 Farm Credit entities across the country. Farm Credit Services of America is the second largest agency in the system, with $7.8 billion in loans.
(Reporter Kristy Hebert welcomes feedback by phone at 800-837-3419, ext. 23 or by e-mail at firstname.lastname@example.org.)
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