Strategy

Ag Firm Andersons Spurns $1B Buyout Offer

HC2 Holdings' unsolicited $37-a-share bid "significantly understates the company's true value," Andersons' chairman says.
Matthew HellerMay 18, 2016

Agricultural company Andersons Inc. said Wednesday it had rejected a $1 billion takeover offer from HC2 Holdings, calling the proposal an “opportunistic attempt” to take advantage of the industry’s downturn.

The $37 per share offer was an improvement on the initial $35 that the holding company run by former hedge fund manager Philip Falcone offered for Andersons, which controls the eighth largest U.S. network of commercial grain elevators by capacity but has been hit by the slump in crop prices.

“We believe HC2’s proposals ignore our value and prospects as a standalone entity and represent an opportunistic attempt to acquire the company at a low point in the industry cycle,” Andersons Chairman Mike Anderson said in a news release.

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The company’s board, he said, had “determined that the offers are not credible, significantly understate the company’s true value and are not in the best interests of our shareholders.”

On Tuesday, Falcone had released a letter to Andersons in which he said the board had not substantively to his most recent offer and criticized the company’s management.

“We believe the Company has been poorly managed and has not been effective in extracting synergies of any significance from the five disparate corporate entities it owns, controls and operates,” Falcone wrote.

In its most recent quarter, Andersons posted a loss of $14.7 million, down from a year-earlier profit of $4.1 million. The stock had fallen 23% this month but received a boost from the takeover news, rising more than 23% to close at $32.07 on Wednesday.

As Reuters reports, grain companies have suffered as the global crop glut has hurt U.S. exports and encouraged farmers to keep their harvests in storage, rather than selling them to merchants. Andersons also runs the eighth-largest privately owned fleet of rail cars and the value of such assets “should increase when overseas demand for U.S. crops recovers,” Reuters said.

Falcone has also proposed an alternative deal that would include buying its grain business and rail segment for $ 950 million and making “stalking horse bids” for the remaining assets.

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