VeraSun Energy Corp. (NYSE:VSE) and US BioEnergy Corp. (NASDAQ:USBE) plan to merge in Q108, according to an announcement made by the two companies today.
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% based on November 23, 2007, closing prices. The existing VeraSun shares will remain outstanding and will represent approximately 60% 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. VeraSun Senior Vice President and CFO Danny C. Herron will become president of the combined company. The combined entity will retain the VeraSun name and trade under VeraSun’s existing NYSE ticker symbol, VSE.
The companies say the merger is expected to create a stronger business platform by improving access to capital and allowing the combined company to leverage technology and operating experience across its entire plant fleet. The merger is also expected to be accretive to VeraSun’s earnings in the first full fiscal year of combined operations, and the combined company is projected to have a market capitalization of approximately $1.5 billion.
Upon completion of the merger, the combined company will have nine ethanol production facilities in operation and seven additional facilities under construction. By the end of 2008, the company says it will have a total production capacity of more than 1.6 billion gallons per year (BGY) and 16 facilities constructed by Fagen, Inc.
Morgan Stanley & Co. Incorporated is serving as financial adviser, and Cravath, Swaine & Moore LLP is acting as legal counsel for VeraSun in the transaction. UBS Securities LLC is serving as financial adviser, and Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal counsel for US BioEnergy in the transaction.
About VeraSun Energy Corporation
VeraSun Energy Corporation, headquartered in Brookings, SD, is a leading producer of renewable fuel. Founded in 2001, the company has 560 million gallons per year (MMGY) of production capacity through five operating ethanol production facilities in Aurora, SD, Fort Dodge, IA, Charles City, IA, Linden, IN and Albion, NE. Four facilities are currently either under construction or development in Hartley, IA, Welcome, MN, Reynolds, IN, and Bloomingburg, OH. Upon completion of the new facilities, VeraSun says it will have an annual production capacity of approximately one billion gallons. The company also has plans to extract oil from dried distillers grains, a co-product of the ethanol process, for use in biodiesel production.
The company markets E85, a blend of 85 percent ethanol and 15 percent gasoline for use in Flexible Fuel Vehicles (FFVs), directly to fuel retailers under the brand VE85″. VeraSun now has approximately 150 VE85″ retail locations under contract in over a dozen states and Washington, D.C.
About US BioEnergy Corporation
US BioEnergy Corporation, based in St. Paul, Minn., is a producer and marketer of ethanol and distillers grains. Founded in 2004, the company currently owns and operates four ethanol plants in Albert City, IA, Ord, NE, Platte Valley, NE, and Woodbury, MI. Four additional ethanol plants are currently under construction in Marion; SD, Hankinson, ND, Dyersville, IA, and Janesville, MN. Upon completion of these initiatives, the company will own and operate eight plants with combined expected ethanol production capacity of 750 million gallons.
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