Jump to content
Sign in to follow this  

USBE and VSE to Merge

Recommended Posts

By Steve Gelsi

NEW YORK (Dow Jones) -- VeraSun Energy Corp. said Thursday it'll pay about $700 million in stock to buy rival US BioEnergy in a deal that unites two of the largest pure-play ethanol makers in the U.S. in the face of tougher economic conditions for sectors of the biofuel market.


US BioEnergy Corp. (USBE) will become part of VeraSun (VSE) less than a year after its initial public offering on Dec. 15 of last year. The deal unanimously approved by each company's board.


Shares of US BioEnergy rose 4.9% to finish at $8.42. VeraSun advanced 3.1% to $10.97.


The combined companies are targeting ethanol capacity of 1.6 billion galls a year by the end of 2008 - enough to unseat Archer Daniels Midland's (ADM) current capacity of about 1.1 billion gallons, and 1.4 billion gallons by the end of next year.


"This merger is an opportunity for two leading companies in the renewable fuels industry to capitalize on synergies and provide value for shareholders," said VeraSun CEO Don Endres, who will serve as CEO of the combined company. "It also underscores the commitment of each company to execute on its growth strategy to become a large-scale, low-cost ethanol producer."


Brookings, S.D.-based VeraSun will pay 0.81 shares of its stock for each share of St. Paul, Minn.-based US BioEnergy, or about $8.62 a share, a premium of 11% over its closing price on Nov. 23.


The combined company will retain the VeraSun name and trade under VeraSun's existing ticker symbol.


The merger is expected to add to VeraSun's earnings in the first full fiscal year of combined operations. The combined company is projected to have a market capitalization of about $1.5 billion.


Upon completion of the merger, the combined company will have nine ethanol production facilities in operation and seven additional facilities under construction.


The merger comes as profits have been squeezed by falling ethanol prices and rising corn prices, as debate rages over whether the corn-based fuel is economically viable.


In an interview with MarketWatch Endres stressed that the ethanol business continues to be profitable with bright growth prospects as a blended additive for gasoline.


"There's been misinformation like...on how ethanol relates to food verses fuel," he said. "These are issues being rates by opponents that don't want our industry to succeed. Our point is we're providing a clean, high octane component that reduces cost of fuel and improves the environment. This is a great space."


The deal marks the second big acquisition this year for VeraSun, which snapped up ASAlliance Biofuels for about $725 million. ASAlliance Biofuels subsequently scrapped its $300 million IPO.


After going public at $14 a share last December, US BioEnergy hit a high of $17.72 on Jan. 3 amid optimism over ethanol as an alternative fuel endorsed by President George Bush. The stock sank to a low of $6.20 a share on Oct. 24.


Once a superstar in Washington, ethanol has increasingly become the alternative energy whipping boy of 2007.


In past interviews with MarketWatch, US BioEnergy CEO Gordon Ommen eyed growth in the business as a blend for gasoline.


Ommen said in September he continues to expect more consolidation in the ethanol business, after US Bioenergy closed on its acquisition of US Bio Marion, LLC, formerly Millennium Ethanol this year.


Ommen will become chairman of the combined company.


The merger will essentially make VeraSun CEO Endres king of all U.S. ethanol makers. Endres became CEO of VeraSun in 2001, according to his biography in company filings.


In 1985, he founded Special Teams, Inc. and served as its president and general manager until it was sold to the American Express Company (AXP) in 1995. Endres then served for two years as president of American Express Special Teams.


In 1999, he became a principal investor and board member of CoEv, Inc., which merged with Tyco International Ltd. (TYC) in 2000.


Endres also co-founded and served as principal investor and chief executive officer of ExpressGold.com, Inc., an Internet payments system company, which merged with CyberSource Corp. in 2000.


> Dow Jones Newswires

Share this post

Link to post
Share on other sites

Verasun has ads on TV promoting their VE85 fuel. Hotrod, you might keep your eyes on VSE and buy some if it dips again. Hopefully this is not the beginning of the end and that the merger gives VSE enough power to stand up to the oil companies.

Share this post

Link to post
Share on other sites

I sure hope the merger works. A USBE is 35 miles east and a VSE is 20 north of me.


Larry- It was almost as if Cessna was giving us Aviation directions in another language or computer port connection type names!!! ;D

Share this post

Link to post
Share on other sites
Odd, posted in the E85 Ethanol stocks, Options futures board


Only if a person intentionally went to a specific forum to read up on a specific topic.

Many of us only check out new posts on the board, since our last visit.

Since the body of the post was an incomplete thought it did not merit much time or attention.



Share this post

Link to post
Share on other sites

1outlaw wrote

Larry- It was almost as if Cessna was giving us Aviation directions in another language or computer port connection type names!!!

Sorry, I thought everybody knew what VeraSun was----I look at it 50 zillion times a day on the Scottrade website. Evidently nobody read my marketwatch post awhile back about VSE. ;) ;D

Share this post

Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Sign in to follow this  

  • Create New...