CKX Lands has agreed to take a $1 billion cash investment from Jacobs Private Equity II and other investors, giving the investor group near-total ownership on a fully converted basis and control of the company. Brad Jacobs, who controls the investment firm, is set to become CKX’s chairman and CEO.
The deal also includes a corporate restructuring, a reverse stock split and a cash dividend for current stockholders. It still requires stockholder and antitrust approvals, among other closing conditions.
Key details
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Investment and ownership: The investors will put $1 billion into CKX in exchange for preferred shares and warrants. After closing, they are expected to own about 99.78% of the company on an as-converted, as-exchanged basis.
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Preferred shares: The investors will receive 1 million preferred shares, convertible in total into about 219 million common shares after the reverse split. The initial conversion price is $4.57 per share, equivalent to $1.09 before the split, subject to customary adjustments.
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Preferred dividends: The preferred shares carry quarterly cash dividends, if declared by the board, at the greater of the dividend payable on the common shares on an as-converted basis or 9% a year of the preferred shares’ initial $1,000-per-share liquidation preference. Any dividends accrued but unpaid will be added to that preference. The preferred shares are not redeemable and generally vote alongside common shares on an as-converted basis, with separate class votes on certain matters affecting preferred holders.
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Warrants: The investors will also receive warrants for about 219 million additional common shares. Half will have an initial exercise price of $4.57 per share; one-quarter, $6.85; and the remaining quarter, $13.70. Those prices equal $1.09, $1.64 and $3.28, respectively, before the reverse split. The warrants can be exercised for 10 years after closing, subject to customary adjustments.
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Restructuring and reverse split: Before the investment closes, CKX plans to change from a Louisiana corporation to a Delaware corporation and then put a newly formed Delaware company above it as the publicly traded parent. Existing CKX shares will convert into equivalent shares of the new parent. The restructuring includes a 4.1744380-to-1 reverse stock split.
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Cash payment to existing holders: Stockholders as of the effective date of the holding-company reorganization will be entitled to an aggregate cash dividend of $20,800,660, payable seven days later. The payment will be made only if the investment closes. The agreement does not specify the amount per share in the material provided.
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Control and management: After closing, JPE will determine the board’s size and designate its members, including Jacobs. It will also direct the composition of board committees, and will determine the company’s new name and trading symbol. CKX expects to enter into a five-year employment agreement with Jacobs, effective at closing, providing for salary, a target bonus, annual equity awards and severance protections. The agreement is expected to allow him to continue providing services to QXO, subject to non-compete and non-solicitation obligations.
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Approvals and timing: CKX’s board unanimously approved the agreement. Stockholders must approve the investment, the corporate changes and reverse split, and any equity incentive plan JPE proposes before the definitive proxy statement is mailed. The deal also requires antitrust approvals and other customary conditions. Either side may terminate if the investment has not closed by June 30, 2027. The agreement also restricts CKX from seeking or negotiating alternative acquisition proposals, subject to exceptions. In certain circumstances tied to a superior proposal or a board recommendation change, CKX may owe JPE a $1 million termination fee.
What changes for investors
The transaction would shift control of CKX to JPE and substantially dilute existing holders’ ownership once the preferred shares are converted and warrants exercised. Current stockholders would receive the specified cash dividend only if the deal closes; the reverse split and conversion into shares of the new parent are part of the restructuring.