HC2 broadens offer for U.S. grain handler Andersons

The Andersons’ ethanol plant at Denison, Iowa. (AndersonsEthanol.com)

Chicago | Reuters — HC2 Holdings Inc. broadened its offer to buy pieces of The Andersons Inc. on Thursday, days after the loss-making U.S. grain handler said an earlier proposal to break up its business units was dead on arrival.

HC2, a holding company run by former hedge fund manager Philip Falcone, said it would pay $1.15 billion for Andersons’ grain, rail and ethanol operations in its latest attempt to take control of the company (all figures US$).

The firm adjusted its offer to “include the interest in the ethanol assets by yet another strategic partner,” after bidding $950 million just for Andersons’ grain and rail businesses last month, according to a letter Falcone sent to the agricultural company.

Falcone restated an offer to acquire all of Andersons for $37 per share in cash, or about $1 billion, plus the assumption of $402 million in debt.

An Andersons spokeswoman did not immediately respond to a request Thursday for comment, but the company on Friday released a copy of a letter it sent Thursday to Falcone, acknowledging receipt of his latest proposal.

The Andersons, in its response to Falcone, said his new proposal “restates your previously rejected offer” but “now further propose(s) to break up the company by acquiring the grain, rail and ethanol businesses.”

The Andersons said its board “will carefully consider your letter and your latest proposal and evaluate whether that proposal is in the best interests of the company and its shareholders.”

Grain companies, including Andersons’ larger rivals Archer Daniels Midland and Bunge, have suffered financially as a global grain glut has depressed crop prices and encouraged farmers to keep their harvests in storage, rather than sell them to merchants.

Andersons in May rejected HC2’s $1 billion takeover offer as too low, calling it an attempt to capitalize on the downturn in the agricultural economy.

Andersons’ stock price has jumped 40 per cent since HC2 first publicized its interest in the company on May 17 but is down 28 per cent from two years ago.

On Tuesday, Andersons said in an investor presentation that HC2’s proposal to acquire the grain and rail businesses was a “non-starter” because the company’s units benefit one another. The remaining businesses would be “incomplete, incongruous and unattractive,” according to a copy filed with U.S. securities regulators.

HC2 said the presentation represented “the same tired pitch about how the company now plans to reduce costs and bring in new leadership with fresh perspectives, and how the portfolio of companies are somehow complementary.”

Last month, HC2 said it would make stalking horse bids for each of the Andersons’ assets outside of grain and rail. A stalking horse bid is used as a starting bid or minimally accepted offer that other interested bidders must surpass if they want to buy a company.

Tom Polansek reports on agriculture and ag commodity markets for Reuters from Chicago. Includes files from AGCanada.com Network staff.

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