The Andersons to Acquire Lansing Trade Group in $305M Deal
U.S.-based agribusiness giant The Andersons announced it has agreed to acquire all shares not already owned in Lansing Trade Group, LLC in a cash and stock deal valued at $305 million. By its nature, the transaction also will result in the consolidation of Ontario, Canada-based Thompsons Limited and its related entities as they had been previously jointly owned by The Andersons and Lansing.
Founded in 1947 in Maumee, Ohio, The Andersons is a diversified North American agribusiness active across four pillars: grain, plant nutrition, ethanol, and rail transport.
This deal will bring in Lansing, a company founded in 1922 in Lansing, Michigan, but currently headquartered in Overland Park, Kansas, that is focused on the movement of physical commodities including grain, feed ingredients, and energy products, along with freight in both North America and overseas. With more than 20 facilities located across the U.S. and Canada, and 12 offices including locations in London and Singapore, Lansing controls approximately 55 million bushels of grain storage, and traded more than 1 billion bushels of grain last year.
Given this, the full integration of Lansing with The Andersons will create a grain company able to compete on a higher level while also providing value across a wider breadth of services and geographies.
"This acquisition creates a grain business of highly complementary assets with greater scale that significantly expands our reach in the agricultural marketplace," said Pat Bowe, president and CEO of The Andersons. "We firmly believe the union of these core agricultural businesses will allow us to compete more successfully, provide greater value across an expanded platform, and grow more profitably. The new, larger organization will provide significant career opportunities for our employees.”
Under the terms of the deal, The Andersons will pay approximately $175 million in cash and will issue unregistered shares to current Lansing equity holders valued at another $130 million (approximately 4.4 million unregistered shares). The Andersons also will assume about $166 million in long-term debt, consisting of $130 million in debt carried by Lansing, and another $36 million in debt carried by Thompsons. All told, the overall purchase price is lower than nine times EBITDA for the 12-month period ending August 31, 2018.
The Andersons expected the deal to be accretive to EPS within the first year post-closing, and to generate cost synergies of at least $10 million by year-end 2020.
"The full integration of Lansing will accelerate execution of our strategic intention to grow income from originations and managing grain assets, expand trading and risk management services, and broaden our food ingredients and specialty grains and feed ingredients platform," said Corey Jorgenson, president of The Andersons Grain Group.
Not too long ago, in May of 2016, The Andersons itself was a target of acquisition, rejecting 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.
The company expressed in a statement released May 18 of that year, that its Board of Directors rejected two offers made by HC2, the first in January 2016 at $35 per share, and the second on March 22, 2016 at $37 per share – the last offer valuing The Andersons above $1 billion, claiming that the offers undervalued the company and its potential.
Being one of the few remaining independent, mid-sized grain handlers in the U.S. with diversified assets, it was rumored that The Andersons could become a target of a bidding war from players such as COFCO and Richardson International Ltd. who would be interested in acquiring grain assets in the U.S. market - a prospect that was not amenable to the company.
At the time, this sentiment was reinforced by Chairman of the Board Mike Anderson in a 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.”
Creating long-term value is something that the joining of The Andersons with Lansing is expected to achieve.
"Combining our talented teams is a very compelling opportunity to unlock potential by bringing together the best of each business,” said Bill Krueger, president and CEO of Lansing Trade Group. “We will be able to provide Freedom pricing tools to the current Lansing producers while leveraging The Andersons' facilities to merchandise more bushels to enhance our ability to supply our consumptive demand base. In effect we will be developing a more robust North American supply chain.”