MAUMEE, OHIO, U.S. — In a move designed to strengthen and broaden its grain business, The Andersons, Inc. on Oct. 15 reached an agreement to acquire the 67.5% of Lansing Trade Group, LLC it does not already own for cash and stock currently valued at a total of approximately $305 million.
As part of the agreement, The Andersons will pay approximately $175 million in cash for the business. The Andersons also said it will issue unregistered shares to current Lansing equity holders presently valued at approximately $130 million, subject to certain closing adjustments and changes in the share price of Andersons stock, respectively. The transaction will result in the consolidation of Thompsons Limited of Ontario, Canada, and related entities as they have been jointly owned by Lansing and The Andersons.
The Andersons said it will assume approximately $166 million of long-term debt, consisting of up to $130 million from Lansing and about $36 million from Thompsons. The implied purchase price is less than 9 times EBITDA for the 12 months ended Aug. 31, 2018.
Based on the current market price of The Andersons shares, The Andersons would issue approximately 4.4 million unregistered shares, including some shares to replace existing unvested incentive compensation and fund retention payments, which would represent approximately 13% of revised new total outstanding shares.
The Andersons expects the transaction to be accretive to EPS within the first full year after closing and to achieve annual run rate cost synergies of at least $10 million by year-end 2020. The transaction is expected to close before Jan. 31, 2019, subject to Lansing shareholder approval and customary government and regulatory approvals.
“This acquisition creates a grain business of highly complementary assets with greater scale that significantly expands our reach in the agricultural marketplace,” said Patrick E. Bowe, president and chief executive officer of The Andersons. “We firmly believe the union of these core agricultural businesses will allow us to compete more successfully, provide greater value across an expanded platform, and grow more profitably. The new, larger organization will provide significant career opportunities for our employees.”
Lansing will be integrated with The Andersons’ Grain Group. The combined operation will be jointly led by Corey Jorgenson, president of The Andersons Grain Group, and Bill Krueger, president and CEO of Lansing Trade Group.
“Combining our talented teams is a very compelling opportunity to unlock potential by bringing together the best of each business,” Bill Krueger, President and CEO of Lansing Trade Group. “We will be able to provide Freedom pricing tools to the current Lansing producers while leveraging The Andersons’ facilities to merchandise more bushels to enhance our ability to supply our consumptive demand base. In effect we will be developing a more robust North American supply chain.”
According to Sosland Publishing Company’s 2018 Grain & Milling Annual, Lansing Trade Group has 22 grain storage facilities with 52 million bushels of total licensed grain storage capacity.
“The full integration of Lansing will accelerate execution of our strategic intention to grow income from originations and managing grain assets, expand trading and risk management services, and broaden our food ingredients and specialty grains and feed ingredients platform,” Jorgenson said.
The Andersons has 44 grain storage facilities with 144.306 million bushels of total licensed grain storage capacity, according to the 2018 Grain & Milling Annual.
Deutsche Bank Securities Inc. and Goldman Sachs & Co. LLC are serving as financial advisers to The Andersons, Inc., with Kirkland & Ellis LLC acting as legal counsel. Citigroup Global Markets Inc. is serving as a financial adviser to Lansing Trade Group, LLC, with Husch Blackwell LLP acting as legal counsel.
Founded in Lansing, Michigan, U.S., in 1922, Lansing Trade Group is focused on the movement of physical commodities, including grains, feed ingredients, energy products, and freight within North America and internationally. Presently based in Overland Park, Kansas, U.S., it employs approximately 550 associates in more than 20 facilities across the United States and Canada and a dozen other offices, including in London and Singapore.