MAUMEE, OHIO — The board of directors of diversified ag processor The Andersons, Inc. has rejected not one, but two, non-binding, highly conditional, unsolicited proposals from Herndon, Va.-based HC2 Holdings, Inc. to acquire all outstanding shares of The Andersons. The Andersons disclosed the bids after HC2 Holdings issued a statement on its intentions on May 17.
The Andersons said it received an initial private, unsolicited proposal from HC2 to acquire the company for $35 per share in cash on Jan. 29. A subsequent proposal was submitted on March 22 for $37 per share in cash, or about $1.043 billion, plus the assumption of $402 million in debt.
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| Michael J. Anderson, chairman of The Andersons |
“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 Michael J. Anderson, chairman of The Andersons. “Following a thorough review, and in consultation with our independent financial and legal advisers, 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. 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.”
Philip A. Falcone, chairman, president and chief executive officer of HC2, said a potential acquisition of The Andersons is consistent with the company’s strategy of pursuing cash flow positive businesses that enhance the overall shareholder value for the company. Founded in 1994, HC2 Holdings is a publicly traded diversified holding company with a diverse array of operating subsidiaries across seven reportable segments, including manufacturing, marine services, utilities, telecommunications, life sciences, insurance and other.
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| Philip A. Falcone, chairman, president and c.e.o. of HC2 |
“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,” Mr. Falcone said.
HC2 made its proposals public after it said The Andersons failed to reply in a timely manner. In a May 17 letter to Mr. Anderson, Mr. Falcone said HC2 believes The Andersons 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.
“A $100 million budget to build a new corporate headquarters, a bloated corporate overhead expense structure coupled with a poor operating performance, weak earnings and a stock that is dramatically underperforming the market and down over 60% from September 2014, only crystallizes our concern that the company’s value proposition model has eroded and is at risk for further decline,” Mr. Falcone said. “Hence, we believe action is necessary to maximize value from these assets, for all shareholders, and urge the board to commence a process immediately. While we continue to be interested in acquiring 100% of the company, the disparate asset base may prevent traditional strategic buyers from any meaningful participation in an auction as a whole. Therefore, we are prepared to work with the board to maximize shareholder value and will offer, as an alternative to acquiring all of The Andersons, $950 million for the acquisition of two of the corporate entities: the Grain Group (excluding the investments in Lansing and Thompson’s) and the Rail Group. In addition, HC2 will provide stalking horse bids for each of the remaining assets in a sale process, including the Ethanol Group, Nutrient Group, Retail, as well as The Andersons’ investments in Lansing, Thompson and other corporate assets, thereby minimizing downside risk for shareholders in an auction for those assets.”
For its part, The Andersons said HC2’s letter “contained numerous inaccuracies and misleading statements.” Among others, HC2’s claim that The Andersons did not substantively respond to its $37 per share offer is “patently false,” the company said.
