(By Balaseshan) Andersons Inc. (NASDAQ: ANDE) said it has agreed to buy 12 grain elevators located in northwestern Iowa and western Tennessee as well as agronomy assets from Green Plains Renewable Energy Inc. (NASDAQ: GPRE).
The agreement involves the purchase of seven facilities in Iowa and five in Tennessee, with a combined grain storage capacity of about 32 million bushels, 12,000 tons of nutrient storage and more than 130 employees and working capital.
This acquisition aligns with Andersons' geographic growth strategy for both its grain and plant nutrient businesses and the company expects it will be accretive on a full-year basis in 2013.
"This will be the largest acquisition in our company's 65 year history, and will increase the storage capacity of our Grain Group by nearly 30%. This acquisition is consistent with our strategy of expanding our footprint into high grain production geographies where we can leverage our core capabilities to serve more customers in diverse trade areas," said Mike Anderson, Chief Executive of Andersons.
Green Plains said the sale involves about 32.6 million bushels, or 83%, of its reported agribusiness grain storage capacity and all of its agronomy and retail petroleum operations.
The estimated price for the facilities and certain related working capital is $133.1 million, including the assumption at closing of term debt of about $28.3 million.
In addition, Green Plains expects to realize net proceeds from the liquidation of retained working capital of about $86.7 million before the repayment of about $85.2 million under a revolving credit facility and inventory financing arrangements.
Green Plains said working capital and amounts outstanding under debt and inventory financing arrangements are based on September 30, 2012 balances and will be adjusted to final amounts at closing. Net cash proceeds, including working capital liquidation, are expected to be about $103.8 million.
"We will continue to participate with our remaining grain handling assets and through future grain storage expansions at or near our ethanol plants. Once closed, this transaction will add more than $100 million in cash to our balance sheet and reduce outstanding debt by more than $113 million," said Todd Becker, CEO of Green Plains.
The closing of the transaction, which is expected to occur during the fourth quarter of 2012, is subject to customary closing conditions and regulatory approvals.
ANDE closed Friday's regular session at $37.69, while GPRE ended at $6.03.