The Andersons Buys Ethanol Biz - Analyst Blog


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The Andersons, Inc. ( ANDE ) has completed the purchase of an ethanol facility in Denison, Iowa from Amaizing Energy Dennison LLC and Amaizing Energy Holding Company, LLC.

The new plant consists of an ethanol production facility with an adjacent 2.7 million bushel grain terminal. It will carry out its operations in the west of Mississippi. It would be included in the Ethanol Group of The Andersons Dennison Ethanol, LLC, a subsidiary of Andersons. The Ethanol Group generated nearly about 12.7% of the total revenue in the fourth quarter of 2011.

The Andersons Denison Ethanol LLC was formed to offer investment opportunities for The Andersons as well as outside investors. The Andersons will manage the operations, and provide grain origination, risk management, and DDG and ethanol marketing services.

The Andersons' Ethanol Group already manages the operations of three plants - Andersons Albion Ethanol LLC in Michigan, The Andersons Clymers Ethanol LLC in Indiana and The Andersons Marathon Ethanol LLC in Ohio.

This is Andersons' first ethanol plant in west Mississippi. Through this acquisition, Andersons will extend its geographical boundaries, to diversify and augment the customer base in its Ethanol Group. It will extend both production and marketing services in area.

The new facility is expected to render greater efficiency to the grain market and other, related services of grain producers based in Iowa. In addition, the new plant would complement the Iowa Northern Railway Company and Lansing Trade Group LLC.

Andersons generates the majority of its revenue from the Grain and Ethanol Group. It contributed nearly 80% in the fourth quarter of 2011. The company makes constant efforts to upgrade the business and strengthen its market position in the face of growing competition.

The Andersons shares currently retain a Zacks #2 Rank (short-term Buy recommendation). It competes with companies like Archer Daniels Midland Company ( ADM ), CHS Inc. ( CHSCP ) and privately-held Cargill, Inc.

Based in Maumee, Ohio, The Andersons is a diversified company operating in five different business segments. These range from buying, selling and storing grain, to leasing railcars and running retail stores to cater to the latest home hardware needs. The company has operations across the U.S. and in Puerto Rico, in addition to rail equipment leasing interests in Canada and Mexico.

ARCHER DANIELS (ADM): Free Stock Analysis Report
ANDERSONS INC (ANDE): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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