MAUMEE, Ohio, June 9, 2016 /CNW/ -- The Andersons, Inc.
(Nasdaq: ANDE) today sent a letter to HC2 Holdings, Inc. (NYSE MKT:
HCHC) in response to HC2's letter dated June
2, 2016. The following is the full text of the letter
that was sent to HC2 Chairman, President and Chief Executive
Officer Philip A. Falcone.
HC2 Holdings, Inc.
450 Park Avenue
30th Floor
New York, NY 10022
Attn: Philip A. Falcone
Dear Mr. Falcone:
As we committed to do in our letter to you of June 3, 2016, the Board of Directors of The
Andersons, Inc. (the "Company") carefully considered the proposals
in your June 2, 2016 letter. At
the Board's direction, I am responding to your most recent
proposals.
The Board has consistently responded to your unsolicited
indications of interest in the Company with a high degree of
seriousness and care. The Board stands ready to engage
constructively on any credible proposal that has a legitimate
possibility of delivering more value to shareholders than the
Company's standalone business plan. The Board, with input
from its independent financial and legal advisors, has concluded,
however, that the proposals in your June
2 letter fall far short of that threshold.
In your June 2 letter, HC2
reiterated its $37.00 per share
proposal to acquire all of the outstanding stock of the Company — a
proposal that the Board previously rejected as significantly
undervaluing the Company. In addition to declining to
increase your offer to acquire the Company to a compelling price
level, you now propose two alternative asset sale structures that
would result in even less value for shareholders.
You previously proposed your first alternative asset sale
structure — the acquisition of the Grain Group (excluding the
investments in Lansing and
Thompson's) and the Rail Group for
$950 million — in your May 17, 2016 letter. The Board evaluated
and rejected that alternative proposal because the $950 million price you offered for those parts
would result in even lower value for shareholders than your
proposal for the whole Company. Valuations of similar
businesses in recent transactions are at multiples well in excess
of what you are proposing. In addition, your alternative
asset sale structure would impose significant tax inefficiencies
and debt breakage costs that further impair value to shareholders
and render your proposal untenable.
Your second alternative asset sale structure outlined in your
June 2 letter is even more
unattractive. The incremental $200
million price you propose to pay for the Ethanol business is
far below the trading values of comparable businesses. Hiving
off the Ethanol business, along with Grain and Rail, exacerbates
the tax inefficiencies of an asset sale and would leave
shareholders with considerably less value from a sale of the parts
than they would receive from your $37.00 per share proposal for the entire
Company.
In sum, 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. Our Board
and management team remain confident in our ability to execute on
our standalone plan and believe we are well positioned to continue
to create significant long-term value for shareholders.
To be clear, as indicated above, the Board and management remain
willing to engage constructively with you or any other party should
circumstances warrant so doing. We offered you a nondisclosure
agreement that is not only consistent with customary practice but
is exceedingly accommodating to the bidder's interests. To
date, you have elected not to respond to our most recent NDA
proposal, which was communicated to you on May 17, 2016. If HC2 is prepared to present
a revised proposal that has the legitimate possibility of
delivering higher value to shareholders than our standalone plan,
the Company would engage with HC2, upon your execution of the
NDA.
Your latest alternative proposals are even more unattractive
than your initial proposal, which has been rejected. Each of
these alternatives continues to significantly undervalue the
Company and, having been made at an opportunistic time in the
overall agribusiness cycle, fails to reflect the Company's
prospects as a standalone entity. Accordingly, the Board,
following review with its financial and legal advisors, has
concluded that each of the proposals described in your June 2, 2016 letter is not in the best interests
of the Company's shareholders and is not a basis for further
discussion.
Sincerely,
Michael J.
Anderson,
Chairman of the Board of Directors
cc:
|
Board of
Directors
|
|
Patrick E.
Bowe
|
|
Naran U.
Burchinow
|
Deutsche Bank is acting as financial advisor and Kirkland &
Ellis is acting as legal advisor to The Andersons.
About The Andersons, Inc.
The Andersons, Inc. is a
diversified company rooted in agriculture. Founded in Maumee, Ohio, in 1947, the company conducts
business across North America in
the grain, ethanol, and plant nutrient sectors, railcar leasing,
turf and cob products, and consumer retailing. For more
information, visit The Andersons online at
www.andersonsinc.com.
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SOURCE The Andersons, Inc.