VeraSun Energy Corp. and US BioEnergy Corp. have announced a merger agreement to take effect during the first quarter of 2008. The deal was unanimously approved by the board of directors of each company. The merger must still clear the hurdles of shareholder approval and anti-trust regulatory clearance.
Little change is expected for the existing U.S. Bio plant at Albert City, or facilities in Fort Dodge and Charles City that will be part of the merged company, along with plants in Nebraska, South Dakota, Indiana and Michigan - and several more proposed for the region.
"We're excited about the merger because it brings together two talented and high-performing teams whose passion is to reduce our nation's dependence on foreign oil through the production of clean renewable biofuels," US BioEnergy President and CEO Gordon Ommen said.
"By harnessing the collective strength of both organizations, we expect to reach 1.6 billion gallons of ethanol production capacity by the end of 2008, making us a global leader in ethanol production."
Under the merger agreement, 0.81 share of VeraSun common stock will be issued for each outstanding share of US BioEnergy common stock, representing a premium of approximately 11 percent. The existing VeraSun shares will remain outstanding and will represent approximately 60 percent of the shares outstanding after the merger.
VeraSun Chairman, CEO and President Donald L. Endres will remain CEO of the combined company, and US BioEnergy President and CEO Gordon Ommen will serve as chairman following the closing of the merger.
"This merger is an opportunity for two leading companies in the renewable fuels industry to capitalize on synergies and provide value for shareholders," said Endres. "It also underscores the commitment of each company to execute on its growth strategy to become a large-scale, low-cost ethanol producer. We are pleased with the opportunity to build a very unique industry platform."
With the booming ethanol industry suddenly facing challenge, the merger should improve access to capital and technology, as the combined company is projected to have a market capitalization of approximately $1.5 billion.
Seven additional facilities under are planned for construction.