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.
|Current Facilities||Owner||Size (MMGY)||Startup|
|Platte Valley, NE||USBE||100||2004|
|Fort Dodge, IA||VSE||110||2005|
|Albert City, IA||USBE||110||2006|
|Charles City, IA||VSE||110||2007|
|Capacity in Operation||870|
|Planned Facilities||Owner||Size (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|
|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.|