October 30, 2018 / 9:13 PM / 14 days ago

U.S. grain handler Andersons eyes growth after Lansing deal

CHICAGO (Reuters) - Two years after fending off a hostile takeover attempt, U.S. grain handler The Andersons Inc (ANDE.O) is expanding its commodity shipping and ethanol businesses and eyeing small- to mid-sized acquisitions to stay profitable during a global supply glut that has hurt U.S. farmers.

The Andersons this month said it was purchasing the remaining 67.5 percent stake in Lansing Trade Group LLC that the company did not already own by paying $175 million in cash, assuming $166 million in long-term debt and issuing stock in its largest-ever acquisition.

“We basically triple our grain business ... and take our company up to just under $10 billion (in annual revenue),” Andersons Chief Executive Officer Pat Bowe said in an interview at the Reuters Global Commodities Summit on Tuesday.

The deal expands The Andersons’ footprint beyond the Midwestern crop belt. Lansing’s assets include grain elevators in Idaho and Louisiana, hydraulic fracturing sand hubs in Minnesota and Texas, and a former Louis Dreyfus Company grain port in Houston.

Bowe said the deal would increase earnings-per-share within a year. That would be quite a comeback from two years ago, when the hedge fund HC2 Holdings Inc offered to buy the loss-making Andersons for $1.15 billion - an overture that was rejected. Bowe joined The Andersons shortly before the takeover attempt after a 30-year career at Cargill Inc [CARG.UL].

Andersons shares are up about 16 percent so far this year after slumping more than 30 percent in 2017.

It is also building what it calls the greenest ethanol plant in the country in Kansas and expects it to start up in 2019, Bowe said.

It has diversified into making flour for pasta and pretzels from the ancient grain spelt at the Purity Foods Inc mill in Michigan, which it purchased for “a few million dollars” in 2017.

As primarily a domestic grain shipper, The Andersons has also been relatively insulated from the U.S.-China trade war that has hampered exports. U.S. soybean shipments to China, valued at $12 billion in 2017, have slowed to a virtual halt after China raised tariffs on the product in July.

Bowe said the company would entertain small to mid-size M&A in the specialty crop nutrients and food space and “was always buying rail cars” but another large acquisition was unlikely in the next year.

“This is a big one for us,” Bowe said of the Lansing deal. “But that’s not precluding us to do other growth acquisitions.”

Reporting by Michael Hirtzer and Karl Plume, editing by Caroline Stauffer and Marguerita Choy; Follow Reuters Summits on Twitter @Reuters_Summits; For more summit stories, see [nL8N1X92DN]

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