Agricultural Firm Andersons Rejects Falcone's Takeover Bid
May 18 2016 - 10:00AM
Dow Jones News
Andersons Inc. said Wednesday that its board rejected offers
from former hedge-fund manager Philip Falcone's HC2 Holdings Inc.,
saying they undervalue the agricultural company.
The company said the move was in response to HC2's disclosure of
its offer of roughly $1 billion in cash on Tuesday. That offer,
disclosed in a letter, valued Andersons shares at $37 apiece.
In recent premarket trading Andersons' shares were at $32.47, up
25%.
Andersons said the board also rejected a previous offer from HC2
of roughly $35 a share. In prepared remarks, Andersons Chairman
Mike Anderson stated "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."
Mr. Anderson said that after a review of the offer and
consulting with its financial and legal advisers, the company's
board "determined that the offers are not credible, significantly
understate the company's true value and are not in the best
interests of our shareholders."
Anderson's also stated that HC2's claim Tuesday that the
agricultural firm didn't substantively respond to its offer of $37
a share was "patently false," adding that the letter included
"numerous inaccuracies and misleading statements."
An HC2 spokesman wasn't immediately available to comment.
In the letter Tuesday, Mr. Falcone called Andersons "poorly
managed" and ineffective in "extracting synergies." He said HC2 is
interested in acquiring all of Andersons, though he detailed an
alternative transaction that would include buying two of the
company's five entities -- its grain business, which is its
largest, and its rail segment—for $950 million. Under that
scenario, HC2 would provide "stalking horse bids," which are
designed to set a floor for potential bids, for the remaining
assets.
Andersons, based in Maumee, Ohio, specializes in the grain,
ethanol, plant-nutrient and rail sectors. In its most recent
quarter, the company posted a loss of $14.7 million, down from a
year-earlier profit of $4.1 million, results that have dragged the
stock down 23% this month.
Mr. Falcone, who formerly led Harbinger Capital Partners, shot
from relative obscurity to become one of the investing stars of the
financial crisis with lucrative bets against subprime mortgages.
But the firm started to suffer deep losses and regulatory issues
emerged. In 2013 Mr. Falcone admitted wrongdoing as part of a civil
settlement with securities regulators that bans him from running a
hedge fund.
Since stepping down from the holding company behind Harbinger,
Mr. Falcone has been running a smaller public holding company—HC2
Holdings—that invests in growth-oriented businesses.
Write to Tess Stynes at tess.stynes@wsj.com
(END) Dow Jones Newswires
May 18, 2016 09:45 ET (13:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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