NEW YORK, June 02, 2016 (GLOBE NEWSWIRE) -- HC2 Holdings, Inc. (NYSE MKT:HCHC), a diversified holding company, announced today that it has sent a second letter to Michael J. Anderson, Chairman of the Board of Directors of The Andersons, Inc., reiterating both its offer to acquire The Andersons for $37 per share in cash or a total purchase price of $1.043 billion, plus the assumption of $402 million in debt as of March 31, 2016, and its willingness to increase its bid, if appropriate, after formal engagement.
HC2 also adjusted its Alternative Proposal to include the Ethanol assets and, as such, raised the Alternative Proposal to $1.15 billion for the Rail, Grain and Ethanol businesses, collectively.
“As we’ve said, we do not believe operating a disparate set of assets is the appropriate path to success for The Andersons,” said Philip Falcone, HC2’s Chairman, Chief Executive Officer and President. “We continue to believe that HC2’s proposals offer the shareholders, employees and customers of The Andersons a better future than that outlined by the current management. As such, we strongly urge the Company’s management and Board of Directors to engage with us and undertake an exploration of strategic alternatives to maximize shareholder value.”
The full text of the letter sent to Mr. Anderson is as follows:
June 2, 2016
Via Email and FEDEX
Michael J. Anderson
Chairman of the Board of Directors
The Andersons, Inc.
480 West Dussel Drive
Maumee, Ohio 43537
cc: Board of Directors
Dear Mr. Anderson:
On May 17, 2016, HC2 Holdings, Inc. ("HC2", "we", or "our") went public with its non-binding indication of interest for an all cash purchase of the outstanding shares of The Andersons, Inc. ("ANDE", or the "Company") at a price of $37.00 per share (the "Proposal"), as well as a second option to acquire the rail and grain units and provide a backstop for the balance of the assets (the “Alternative Proposal,” and, together with the Proposal, the “Proposals”). Both the Proposal and the Alternative Proposal remain open and cover the entire Company. The Proposal for the acquisition represented a premium of approximately 43% over ANDE's closing price on the day it was made public.
Unfortunately, despite months of repeated attempts to engage constructively to discuss our Proposal, your response to our Proposals has been a continuation of your pattern to neither provide any meaningful feedback nor show any willingness to engage with us. Instead, in less than twenty-four hours after receiving our Proposals, you summarily dismissed them as “opportunistic,” “not credible,” and “highly conditional”.
On Tuesday, May 31st, ANDE released its June 2016 Investor Presentation, which appears to be merely a thinly-veiled response to our Proposals with the same tired pitch about how the Company now plans to reduce costs and bring in new leadership with fresh perspectives, and how the portfolio of companies are somehow complementary. Although you assert that our Proposals are opportunistic (the offer to purchase the Company has been pending since January 2016), you overlook the fact that ANDE’s stock price has been consistently below $37 dollars for all but two of the past eight years.[1] Simply stated, the Company’s issues are not solely related to a temporary cyclical downturn.
Contrary to your assertions, the financing of our Proposals is not “highly contingent,” which you would have discovered had you not refused for five months to execute a reasonable non-disclosure agreement to obtain proper information. You also fail to mention the support we have from reputable firms like Cerberus and our advisors, Jefferies and Credit Suisse, as well as our strategic partner. Our Proposals contain far greater assurances of financing than most acquisition proposals at this stage of negotiations and, like virtually all proposals made at this stage, are subject only to standard due diligence prior to drafting a definitive purchase agreement. Finally, your irrelevant personal attacks are an obvious concession that you cannot reject our Proposals on their merits.
After disclosing our Proposals to acquire ANDE, we have heard from numerous shareholders of the Company, all of which are in agreement with the common theme that maintaining the status quo at ANDE is simply not an option and that attempting to operate a disparate set of assets is not the appropriate path to success. Our Proposals are an opportunity for all holders to benefit immediately and not have to wait and take the risk of a five-year turnaround that may never materialize. With the Company’s stock up over 40% since our announcement, it would appear ANDE’s shareholders are in favor of such a transaction and consequently believe, as we do, that the best course of action for the Company is to engage with us and undertake an exploration of strategic alternatives to maximize shareholder value, whether as a sale of the Company as a whole and or via an auction of its disparate businesses.
What is most disappointing and alarming, however, is your complete dismissal of our Alternative Proposal to buy the Grain and Rail groups and your failure to entertain our willingness to be a stalking horse bidder in an auction process for the remaining set of assets while knowing full well who our strategic partner is and stating that there is “no evidence of equity.” We assume you are well aware of your duties as fiduciaries, so we remain mystified by how you satisfied your duties when claiming to have reviewed our Proposal, including our $950 million Alternative Proposal, all between the night of May 17th and 8 a.m. on May 18th. Nonetheless, we reiterate that our Alternative Proposal still stands and will now be adjusted to include the interest in the Ethanol assets by yet another strategic partner and, as such, our Alternative Proposal is raised to $1.15 billion for the Rail, Grain and Ethanol businesses. Hence, you should make no mistake about our sincere desire and ability to own ANDE, and, if necessary, and as mentioned in our Proposals, our willingness to participate in a competitive process to buy the Company and/or its businesses.
We continue to believe that HC2 offers ANDE’s shareholders, employees and customers a better future than the current management has offered, and we strongly urge you and the Board of Directors to listen to your shareholders and reconsider your uncooperative approach. We fail to see how you believe it is in your shareholders’ best interests to not immediately engage with us to explore our Proposals. We are prepared to enter into meaningful discussions regarding our Proposals and to devote all necessary resources to evaluate and complete a negotiated transaction. As we have repeatedly stated since first contacting you in January, if we are permitted appropriate access to conduct due diligence, we may well determine to increase the value of our Proposals.
Although we believe it would be in everyone's best interest to engage privately and constructively to explore a potential transaction, we must, however, reserve all of our rights to take any action we deem necessary in furtherance of our Proposals. We hope you will reconsider your current stance, and we stand ready to meet at your convenience to discuss next steps.
We look forward to hearing from you.
Sincerely,
Philip A. Falcone
Chairman, President and Chief Executive Officer
cc: Paul L. Robinson, CLO
1 Since its inception, ANDE has traded above $37.00 per share 532 days out of a total of 5,106 trading days, or approximately 10.4% of its time as a publicly traded corporation.
About HC2
HC2 Holdings, Inc. is a publicly traded (NYSE MKT:HCHC) diversified holding company, which seeks opportunities to acquire and grow businesses that can generate long-term sustainable free cash flow and attractive returns in order to maximize value for all stakeholders. HC2 has a diverse array of operating subsidiaries across seven reportable segments, including Manufacturing, Marine Services, Utilities, Telecommunications, Life Sciences, Insurance and Other. HC2's largest operating subsidiaries include Schuff International, Inc., a leading structural steel fabricator and erector in the United States, and Global Marine Systems Limited, a leading provider of engineering and underwater services on submarine cables. Founded in 1994, HC2 is headquartered in Herndon, Virginia.
