Agricultural Firm Andersons Rejects Falcone's Takeover Bid

Andersons Inc. said Wednesday that its board rejected offers from former hedge-fund manager Philip Falcone's HC2 Holdings Inc., saying they undervalue the agricultural company.

The company said the move was in response to HC2's disclosure of its offer of roughly $1 billion in cash on Tuesday. That offer, disclosed in a letter, valued Andersons shares at $37 apiece.

In recent premarket trading Andersons' shares were at $32.47, up 25%.

Andersons said the board also rejected a previous offer from HC2 of roughly $35 a share. In prepared remarks, Andersons Chairman Mike Anderson stated "we believe HC2's proposals ignore our value and prospects as a standalone entity and represent an opportunistic attempt to acquire the company at a low point in the industry cycle."

Mr. Anderson said that after a review of the offer and consulting with its financial and legal advisers, the company's board "determined that the offers are not credible, significantly understate the company's true value and are not in the best interests of our shareholders."

Anderson's also stated that HC2's claim Tuesday that the agricultural firm didn't substantively respond to its offer of $37 a share was "patently false," adding that the letter included "numerous inaccuracies and misleading statements."

An HC2 spokesman wasn't immediately available to comment.

In the letter Tuesday, Mr. Falcone called Andersons "poorly managed" and ineffective in "extracting synergies." He said HC2 is interested in acquiring all of Andersons, though he detailed an alternative transaction that would include buying two of the company's five entities -- its grain business, which is its largest, and its rail segment—for $950 million. Under that scenario, HC2 would provide "stalking horse bids," which are designed to set a floor for potential bids, for the remaining assets.

Andersons, based in Maumee, Ohio, specializes in the grain, ethanol, plant-nutrient and rail sectors. In its most recent quarter, the company posted a loss of $14.7 million, down from a year-earlier profit of $4.1 million, results that have dragged the stock down 23% this month.

Mr. Falcone, who formerly led Harbinger Capital Partners, shot from relative obscurity to become one of the investing stars of the financial crisis with lucrative bets against subprime mortgages. But the firm started to suffer deep losses and regulatory issues emerged. In 2013 Mr. Falcone admitted wrongdoing as part of a civil settlement with securities regulators that bans him from running a hedge fund.

Since stepping down from the holding company behind Harbinger, Mr. Falcone has been running a smaller public holding company—HC2 Holdings—that invests in growth-oriented businesses.

Write to Tess Stynes at [e-mail]

(END) Dow Jones Newswires

May 18, 2016 09:45 ET (13:45 GMT)

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