Green Plains Acquires Three Abengoa Ethanol Plants for $237M

Green Plains Inc. announced it has agreed to acquire three ethanol plants located in Madison, Illinois, Mount Vernon, Indiana, and York, Nebraska from Spain’s Abengoa Bioenergy for $237 million.

Green Plains is the fourth largest ethanol producer in the U.S. with additional business activity related to distillers dried grains, corn oil production, and grain handling and storage. In addition to the 1.2 billion gallons of ethanol the company currently producer per year, World Grain reports that the company also sees yearly production of approximately 3.5 million tons of livestock feed and 290 million pounds of industrial grade corn oil.

The successful closing of this deal is expected to lift the company’s ethanol production by 20 percent, according to Omaha.com, and will bring the company’s holdings to a total of 17 dry mill ethanol plants with a combined output of nearly 1.5 billion gallons of ethanol per year.

The acquisition is also of strategic importance to Green Plains’ expansion plans.

"The Madison and Mount Vernon plants will give us access to the Mississippi River, supporting our new export terminal planned in Beaumont, Texas. In addition, we will broaden our product offering globally with industrial alcohol production at the York plant,” said Todd Becker, Green Plains’ president and chief executive officer in a company statement.

Demand Dynamics

Although U.S. ethanol supply and demand dynamics are highly affected by several factors, including production levels of corn and sugarcane in Brazil and Asia as well as unpredictable weather both in the U.S. and abroad, ethanol exports from the U.S. for the four years between 2011 and 2015 increased by 33 percent, according to Omaha.com.

Indeed, according to the U.S. Energy Information Administration (EIA) the U.S. has remained a net exporter of ethanol for six consecutive years, shipping to 35 overseas markets in 2015. Last year U.S. ethanol exports reached 844 million gallons with the top destination market being Canada, which took 249 million gallons, or about 30 percent

of total U.S. exports, followed by Brazil, which took 116 million gallons and the Philippines, which took 72 million gallons.

Ongoing Consolidation

Biofuels Digest reports that Green Plains has been highly acquisitive since 2010, as the company leverages low investor interest in the sector to its advantage.

In 2010 the company acquired Global Ethanol including two ethanol plants in Lakota, Iowa and Riga, Michigan for $147.6 million, followed by the purchase of the Fergus Falls ethanol plant in Minnesota for $55 million in 2011. Then in 2013 the company acquired two ethanol plants in Wood River, Nebraska and Fairmont, Minnesota from BioFuel Energy Corp for $101 million, and in 2015 Green Plains acquired Hereford Renewable Energy LLC for $93.8 million and then acquired an idled ethanol plant in Hopewell, Virginia from Future Fuels LLP for $18.25 million.

Biofuels Digest goes on to note that the space is set to see further consolidation however, as Archer Daniels Midland (ADM) is expecting bids by the end of August for its U.S. corn dry mills after making presentations to seven potential buyers.