Andersons (ANDE) Snubs HC2's Acquisition Bids; Stock Jumps

In a formal announcement, The Andersons, Inc. (NASDAQ:ANDE) notified that its board of directors has rejected two non-binding, highly conditional, unsolicited bids from HC2 Holdings, Inc. (NYSE:HCHC) to acquire its 100% stake. Andersons' shares spiked nearly 24% yesterday in response to the news.

HC2, which holds a stake in Andersons, has repeatedly expressed interest in a negotiated transaction since January. On Jan 29, HC2 offered a private and unsolicited proposal of $35 per share in cash to acquire Andersons. A subsequent proposal was submitted on Mar 22, for $37 per share for $1.04 billion, which represents a 42% premium to Andersons' closing stock price on May 17. The offer also includes the assumption of $402 million of Andersons’ debt.

In an alternative transaction, HC2’s chief executive officer (CEO), Philip Falcone, proposed to buy Andersons’ rail unit and part of its grain business for $950 million. In that case, HC2 would provide stalking horse bids for each of the remaining assets of Andersons.

Andersons thereafter carefully reviewed both the offers and consulted its independent financial and legal advisors. Finally, management unanimously determined that both of HC2's proposals are undervalued and not in the best interests of the company and its shareholders.

Though Andersons posted a loss in the first quarter of 2016, it remains confident of executing its strategies, which will create significant long-term value for shareholders. The company’s outlook for the remainder of the year remains strong as nutrient sales are trending favorably and ethanol margins are expected to improve with summer driving demand.

The grain group’s performance will continue to be challenged but many factors point to opportunities in the fourth quarter and going into 2017. The combination of the high levels of residual inventory in the industry and the recently published planting acreage estimates points to higher space utilization levels during this year's harvest, providing opportunities for the company to purchase grain at more normal discounts and achieve desired profits from the space.

Maumee, OH-based Andersons is a diversified company, operating in six different business segments ranging from buying, selling and storing grain to leasing railcars and running retail stores catering to the latest home hardware needs.

Andersons currently carries a Zacks Rank #5 (Strong Sell). Better-ranked stocks in the sector include First Majestic Silver Corp. (NYSE:AG) and E. I. du Pont de Nemours and Company (NYSE:DD) , both carrying a Zacks Rank #2 (Buy).

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