U.S. independent grain trader The Andersons Inc. rejected a hostile $1.04 billion takeover offer from HC2 Holdings Inc., the investment company run by former hedge fund manager Philip Falcone.
The Andersons said in a statement Wednesday that its board of directors had rejected two offers from HC2 at $35 and $37 per share in cash, made in late January and late March respectively.
HC2 disclosed its most recent offer late Tuesday. In a letter to Andersons’ board, Falcone, HC2’s chief executive officer, also outlined an alternative proposal in which his company would acquire Andersons’ rail unit and part of its grain business for $950 million.
"We believe HC2’s proposals ignore our value and prospects as a standalone entity and represent an opportunistic attempt to acquire the company at a low point in the industry cycle," Andersons Chairman Mike Anderson said in the statement.
Maumee, Ohio-based Andersons has posted three straight quarterly losses, the longest stretch in the red since it became publicly traded 20 years ago. The proposed bid at $37 a share is 43 percent higher than Anderson’s closing share price on Tuesday. The stock changed hands at $32 at 8:33 a.m in pre-market trading in New York.
Andersons is one of the few remaining independent grain traders left in North America, a region that has been dominated for decades by major players such as Cargill Inc., Archer-Daniels-Midland Co. and Bunge Ltd. Medium-sized, independent grain handlers like Andersons may be a good fit for the agricultural units of Glencore Plc and Chinese group Cofco, which have expressed their desire to fill a gap in their businesses.
HC2’s offer for Andersons "meaningfully understates" the stock’s value using a number of measures including sum-of-the-parts valuation and book value, BB&T analyst Heather Jones said in a note Wednesday.
"In our view, the $37 offer is an opening shot and is likely to be revised higher," said Jones, who has a buy rating on the stock.