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VeraSun Energy and US BioEnergy to Merge; 1.6B Gallons of Combined Ethanol Production Capacity by End of 2008

VeraSun Energy Corp. and US BioEnergy Corp. have entered into a definitive merger agreement, which has been unanimously approved by the board of directors of each company. The merger is expected to close during the first quarter of 2008, pending shareholder approval, anti-trust regulatory clearance and the completion of other customary conditions.

Upon completion of the merger, the combined company will have nine ethanol production facilities in operation and seven additional facilities under construction. By the end of 2008, the company is expected to have a total production capacity of more than 1.6 billion gallons per year (BGY) and 16 facilities constructed by Fagen, Inc. and utilizing ICM process technology.

At that size, assuming projected facilities come on line on time, the new VeraSun would edge past ADM by the end of 2008 as the largest ethanol producer in the US.

Under the merger agreement, 0.81 share of VeraSun common stock will be issued for each outstanding share of US BioEnergy common stock, representing a premium of approximately 11% based on 23 November 2007 closing prices. The existing VeraSun shares will remain outstanding and will represent approximately 60% of the shares outstanding after the merger.

The merger is expected to create a stronger business platform by improving access to capital and allowing the combined company to leverage technology and operating experience across its entire plant fleet. The merger is also expected to be accretive to VeraSun’s earnings in the first full fiscal year of combined operations, and the combined company is projected to have a market capitalization of approximately $1.5 billion.

VeraSun Chairman, CEO and President Donald L. Endres will remain CEO of the combined company, and US BioEnergy President and CEO Gordon Ommen will serve as chairman following the closing of the merger. VeraSun Senior Vice President and Chief Financial Officer Danny C. Herron will become president of the combined company. The combined entity will retain the VeraSun name and trade under VeraSun’s existing NYSE ticker symbol, VSE.

Production Profile
Current FacilitiesOwnerSize (MMGY)Startup
Aurora, SD VSE 120 2003
Platte Valley, NE USBE 100 2004
Fort Dodge, IA VSE 110 2005
Woodbury, MI USBE 50 2006
Albert City, IA USBE 110 2006
Ord, NE USBE 50 2007
Charles City, IA VSE 110 2007
Linden, IN VSE 110 2007
Albion, NE VSE 110 2007
Capacity in Operation 870  
Planned Facilities OwnerSize (MMGY)Startup
Bloomingburg, OH VSE 110 Q1 2008
Marion, SD USBE 110 Q1 2008
Welcome, MN VSE 110 Q2 2008
Hartley, IA VSE 110 Q2 2008
Dyersville, IA USBE 110 Q2 2008
Hankinson, ND USBE 110 Q2 2008
Janesville, MN USBE 110 Q3 2008
Reynolds, IN VSE 110 2009*
Capacity under Construction or Development 880  
Total Operating Capacity Upon Completion of all Facilities under Construction or Development 1,750  
* Assuming construction resumes in 2008, which will depend on market conditions.



This is good news the combined company will add a third US ethanol producer (the two others being Poet and ADM) that is large enough to fund their own R&D at a level where it is effective. As a rough rule of thumb 1 billion gallon a year will bring in revenues of $2.5 billion from ethanol and distiller grains.


the USA uses ~22 billion gallons of gasoline a year, in gallon this would replace ~7% of all gasoline, its not much but its a start.


7% sounds huge to me. If you can get to 7% before cellulosic even gets started, it starts to look promising for ethanol plug in hybrids taking over in the next couple decades.


The U.S. uses more like 150 billion gallons of gasoline per year. E10 would be 15 billion gallons and this is about 10% of that.


Well .... What is it really?

~22 Billion gallons -or- 150 Billon gallons ?

Thats a huge difference of opinion.


150 is much closer to the true number.


Ethanol from corn or any other edible food will just increase the cost of produce. It is a cost that we are already feeling at the supermarket. I agree that ethanol is a viable solution, however our current approach is misguided. Cellulosic ethanol can be produced from algea. (IENI) is already in the forefront of this process. It is produced from algea, not corn or any other consumable produce.


Yeah he's right my bad, its was a back of the napicken calculation. ~20 million barrels per day x 50% goes to gasoline x 42 gallons per barrel x 365 days per year = ~150,000 million so yeah 1.6 billion is ~1% not 7%, I remember a study awhile back saying if all corn was to be converted to ethanol we could replace ~5% of gasoline so I was a little worried about 7% figure but I had to go to work, again my bad.


The actual supply figures for motor gasoline are found at the Energy Information Administration.

Linda G

Ethanol is produced from corn.The corn in the US is nearly 100% GM....I am really interested in alternative energy but can not with a good conscience invest in Ethanol production because of this.


Linda G,

Why? First explain whats wrong with GM corn.


No amount of ethanol, butanol, NG etc. can alter the inevitable. Anthropogenic CO2 is the final solution. The floods will wash away the vile blasphemers and then we get our world back.


Gm corn invades neighboring producers fields,allowing Monsanto to sue on the basis of uncertified use.GM corn seed cannot be saved and planted therefore forcing farmers to buy all new seed yearly.Only 20 to 30 years from now will all the ecological effects of GM corn and other genetic manipulation be known.


Corn is a hybrid. You have to buy new seed every year no matter if it is GM or not. I think you are thinking of soybeans for which you can save the seed for next year, but soybeans do not cross pollinate with other beans because they self pollinate, so I am not sure where you are going with your comment.


The previous comment should have been addressed to middleoroad.

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