May 18, 2016

Ohio-based agribusiness, The Andersons Inc. has rejected an unsolicited, all cash, $1.04 billion takeover bid offered by HC2 Holdings Inc., the New York-based holding company led by former hedge fund manager, Philip Falcone, reports Bloomberg.

The company expressed in a statement released May 18, that its Board of Directors rejected two offers made by HC2, the first in January of this year at $35 per share, and the second on March 22 at $37 per share – the last offer valuing The Andersons above $1 billion, claiming that the offers undervalued the company and its potential.

“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, said chairman, Mike Anderson in a company statement. “Following a thorough review, and in consultation with our independent financial and legal advisors, our Board determined that the offers are not credible, significantly understate the Company’s true value and are not in the best interests of our shareholders.”

Global grain handlers including China’s COFCO and Richardson International Ltd. have expressed interest in acquiring grain assets in the U.S. market, and given that its one of the few remaining independent grain handlers in the country, its diversified assets, its mid-size, and its rejection of the HC2 bids could make The Andersons the target of a bidding war, according to the Standard Examiner.

Being acquired however, is not a path that The Andersons is considering, the company’s new chief executive, Patrick Bowe told Reuters.

This sentiment was reinforced by chairman of the Board, Mike Anderson in a recent company statement, saying, “Our Board and management team remain confident in our ability to execute on our standalone plan and believe we are well positioned to continue to create significant long-term value for shareholders.”

Be that as it may, Bloomberg points out that the field of potential buyers remains wide, and includes Archer Daniels Midland, Bunge Ltd., Cargill, Louis Dreyfus Co, and Glencore, which sold a 40% stake in its agribusiness to Canadian pension fund, CPPIB for $2.5 billion and is reportedly in talks to sell an additional 9.9% stake valued at $625 million.

Indeed, the Toledo Blade reports that HC2 details in a statement how The Andersons, which has posted three consecutive quarterly losses, is a fitting acquisition. “An acquisition of The Andersons is consistent with our strategy of pursuing cash flow positive businesses that enhance the overall shareholder value for the company,” Mr. Falcone said. “We are confident in our ability to complete the transaction given that there are no financing conditions and our exclusive understanding with a qualified strategic partner that is aligned with us to complete this transaction.”

HC2 has stated that The Andersons has been “poorly managed” in the face of weak earnings and a new corporate headquarters that is rumored to have cost $100 million. The holding company has offered to acquire the company’s grain and rail businesses for $950 million in lieu of a complete company buyout. It has also stated that it would make “stalking horse” bids, or feeler bids for each of The Andersons’ remaining assets, reports CNBC.

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by Lynda Kiernan