#USA #Maumee, Ohio #Ethanol #Andersons #Harvestone

The Andersons, Inc. Enhances Ethanol Production with Harvestone Acquisition

The Andersons, Inc., a notable player in the agricultural and renewable sectors, has announced a significant move to expand its operations in the low-carbon ethanol market. The company has finalized an agreement to acquire Harvestone Low Carbon Partners (HLCP) for approximately $915 million. This acquisition is projected to add around 215 million gallons annually to The Andersons' ethanol production capacity, which is expected to reach a total of approximately 730 million gallons upon completion.

Strategic Expansion and Synergistic Benefits

This acquisition is not just about increasing production volumes but also strategically positions The Andersons in premium markets focused on low-carbon fuels. With HLCP's established presence in North Dakota and Indiana, the deal will enhance The Andersons' reach in the Western and Eastern Corn Belt regions respectively. These locations are not only critical for effective corn procurement but also have established logistics infrastructure that will support the supply chain of low-carbon ethanols.

Additionally, the deal allows The Andersons to leverage HLCP's expertise in carbon capture and sequestration (CCS), positioning the company as one of the few U.S. ethanol producers with Class VI CO2 injection capabilities. This advanced technology is instrumental in reducing the carbon footprint of ethanol production, enabling The Andersons to tap into low-carbon fuel markets and associated tax incentives more effectively.

Bill Krueger, President and CEO of The Andersons, emphasized the value of this acquisition, stating that they have been assessing ethanol plant opportunities for several years. He noted that HLCP's competitive production economics and low-carbon capabilities complement The Andersons’ existing operations, setting the stage for profitable growth and returns for shareholders.

Financial Implications

The financial structure of the deal involves roughly $300 million in borrowing through The Andersons' revolving credit facility, alongside $615 million sourced from long-term debt. The company anticipates that the acquisition will be immediately accretive to earnings per share and cash flow, which aligns with its priorities of maintaining a robust balance sheet. Projected pro forma long-term debt-to-EBITDA will remain below 2.5x, indicating financial sustainability post-acquisition.

HLCP is expected to generate significant cash flows as it capitalizes on its low-carbon production capabilities and tax revenue from relevant credits (45Z and 45Q). This financial boost will allow The Andersons to continue its focus on growth-oriented investments and shareholder returns.

Vision for the Future

Both companies have expressed optimism about the cultural and operational alignment anticipated from this merger. Jeff Zueger, CEO of HLCP, stated that both organizations share a steadfast commitment to their stakeholders, including employees and communities. The leaders foresee numerous opportunities for collaboration and innovation in renewable fuels, potentially enhancing their competitive positions in the ethanol market.

The acquisition transaction is expected to close in late 2026 or early 2027, pending regulatory approvals and customary conditions. Goldman Sachs & Co. LLC acted as the financial advisor, while Polsinelli PC provided legal counsel to The Andersons throughout the process.

Conclusion

The acquisition of Harvestone Low Carbon Partners signifies The Andersons, Inc.’s strategic commitment to expanding its low-carbon fuel production capacity. By integrating HLCP’s operations and resources, The Andersons not only bolsters its production scale but also positions itself as a leader in the evolving market of environmentally friendly fuels. This deal reflects a calculated move towards sustainable growth and profit optimization, as the company continues to serve its stakeholders effectively in the renewable energy landscape.