The two U.S. grain firms that jointly own Ontario grain handler and processor Thompsons Ltd. are taking their relationship to the next level.
Ohio-based grain handling and processing firm The Andersons, Inc. announced Monday it has signed a deal with Lansing Trade Group (LTG) for the remaining 67.5 per cent of LTG it doesn’t already own.
The Andersons has held a minority equity stake in Kansas-based LTG since 2003 — 15 per cent at first, gradually increasing to 49 per cent by 2008 and later pared back to its current level.
The cash-and-stock acquisition, valued at about $305 million, will give LTG shareholders about $175 million in cash and about $130 million in unregistered Andersons shares (all figures US$).
The deal will also “result in the consolidation” of Thompsons, which LTG and The Andersons bought jointly in 2013, each holding a 50 per cent stake in the joint venture.
Blenheim, Ont.-based Thompsons, a grain and food-grade bean handler and crop input provider, has 12 facilities in Ontario and Minnesota.
Andersons CEO Pat Bowe said in a release Monday a merger with LTG will create “a grain business of highly complementary assets with greater scale that significantly expands our reach in the agricultural marketplace.”
The deal calls for LTG’s business to be “integrated” with that of The Andersons’ grain group, and the merged business to be jointly led by Andersons’ grain group president Corey Jorgenson and LTG CEO Bill Krueger.
The Andersons has been weighed down in the past few years by the same market pressures burdening U.S. agrifood firms such as Bunge, ADM and Cargill, which have faced both low grain prices and limited price volatility.
In its 2017 annual report, it noted its grain group “recovered nicely from a tough 2016” while its other business groups, including ethanol, plant nutrients and rail equipment leasing, faced “significant market challenges.” In early 2017 The Andersons also folded its retail business, affecting over 1,000 employees.
The Andersons in fiscal 2017 booked $42.5 million in net income attributable to the company on $3.69 billion in sales and merchandising revenues, up from $11.6 million on $3.9 billion in 2016.
The Andersons said Monday it expects a deal for LTG to accrue to EPS (earnings per share) within the first full year after the deal’s closing, which is expected before the end of January, pending the usual regulatory and shareholder approvals.
It said it also expects the merged business to chalk up annual run rate cost synergies of at least $10 million by year-end in 2020.
Jorgenson, in Monday’s release, said the merger is expected to speed up The Andersons’ plans 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.”
Privately-held LTG’s Canadian holdings also include a stake of about 38 per cent in Alberta-based grain handler Providence Grain Group. Lansing’s grain trading desks on the Prairies and at Chatham, Ont. now operate under the Providence and Thompsons banners respectively.
LTG further built up its space in Canadian grain merchandising in 2012 in a Hamilton-based joint venture with Singapore’s Olam International, which at the end of 2013 sold its stake in that operation back to Lansing for $5.4 million.
LTG’s businesses, apart from grain and oilseed trading, include trading of feed ingredients such as distillers grains, wheat middlings, protein meals and cottonseed and merchandising of energy products including ethanol, natural gas liquids and frac sand. — Glacier FarmMedia NetworkTagged Andersons, Lansing Trade Group, LTG, Providence Grain, Thompsons