The Andersons, Inc.
) has agreed to buy all the assets of Mt. Pulaski Products, LLC
which makes products from corn cobs. The transaction, the terms of
which were not disclosed, is expected to close in the fourth
Mt. Pulaski, Illinois-based Mt. Pulaski Products is a leading corn
cob processor which, through advanced technologies, produces high
quality and eco-friendly corn cob products and materials. It
operates two facilities in central Illinois.
After the completion of the acquisition, the new assets will be
included in the Turf and Specialty Group, Cob Division. During
second-quarter 2012, the segment's revenues rose 5.5% year over
year to $43.8 million.
With this acquisition, Andersons will become the owner of multiple
corn cob product mills. As a result, the new facilities together
with the company's facility at Delphi, Indiana, will position it as
the sole leader of cob processor as well as product manufacturer.
Moreover, Andersons' raw corn cob supply will be doubled as the
mills are best positioned around the seed corn production areas in
Illinois. Therefore, the company will get the benefit of an
enhanced cob product portfolio and will be able to provide more
improved services to a wider client base.
The decision to buy the assets fits in well with Andersons'
strategy to expand its geographic footprint into potential new
markets and enhance product portfolio which will boost its
revenues. Earlier, in May 2012, the company completed the
acquisition of an ethanol facility in Denison, Iowa, now owned by
The Andersons Denison Ethanol LLC.
In January, Andersons purchased the manufacturer and wholesale
marketer of specialty agricultural nutrients and industrial
products, New Eezy Gro, Inc. It was integrated into the company's
Plant Nutrient Group segment.
However, the prevailing severe drought condition in the U.S. will
affect Andersons negatively. In addition, lower wheat production in
the second half of the year, resulting in lower wheat storage will
be headwind for the company.
During the second quarter, Andersons' reported earnings of $1.56
per share, missing the Zacks Consensus Estimate of $1.64. Total
revenues decreased 1.7% year over year to $1.32 billion, falling
behind the Zacks Consensus Estimate of $1.37 billion.
Andersons retains a short-term Zacks #3 Rank (Hold). We have a
long-term Neutral recommendation on the stock.
ANDERSONS INC (ANDE): Free Stock Analysis
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