Ancora Holdings urges Green Plains to put itself up for sale - letter

Green Plains

31/01/2023 20:55

(Adds comment from company, stock price)
    By Svea Herbst-Bayliss
       NEW YORK, Jan 31 (Reuters) - A top investor in Green
Plains Inc  GPRE.O  is calling for the biofuel producer to run a
full sales process at a time when the company is facing
increased risks and strategic buyers are eager to purchase
renewable energy companies.
    Ancora Holdings Group, which owns a nearly 7% stake and is
Green Plains' second largest shareholder, sent a letter, seen by
Reuters, to the board on Tuesday arguing a buyer would likely
pay at least $50 a share for the company.
    "Our analysis and diligence indicate that strategic buyers
with considerable cash on their balance sheets could be
interested in acquiring the Company at a significant premium to
current trading prices," the letter said.
    The company regularly reviews its strategy and ways to push
up the share price, a spokeswoman said. 
        "We are confident in our ability to execute on our
transformation plan, but we are always mindful of our
alternatives," she added.
  
        Green Plains' stock price climbed 13.9% to trade at
$35.36 on Tuesday.
  
    Thanks to its acquisition of Fluid Quip Technologies in
2021, Green Plains has new assets and technologies that are
appealing to strategic buyers in the agricultural products and
energy sectors, Ancora wrote.
    The company has said it is working on having roughly 400
million pounds of renewable corn oil production capability by
2024. It is also in the process of commercializing its clean
sugar ingredients, which could become a significant threat to
industry leaders Archer-Daniels Midland, Ingredion, and Cargill.
     "It is our belief that Green Plains' ties to the ethanol
industry are masking the value of its strategic and highly
competitive co-products," Ancora wrote.
    Ancora noted its "positive dialogue" with the company and
praised the board and management for moves that have helped
Green Plains transition from an ethanol-dependent producer. The
company said it appreciates its ongoing dialogue with Ancora and
"seek(s) to maintain a constructive relationship with them."
    But Ancora also warned that emerging risks, including
reduced fuel consumption and political change are lurking and
that "the macro environment presents a much greater challenge to
Green Plains.
    Faced with potential challenges, Ancora estimates Green
Plains may only have a few months to act and should move
decisively by hiring financial advisers who could run an
organized auction process.
    By running a comprehensive process, Ancora says Green Plains
would be much more likely to catch the attention of potential
buyers than by sitting back and waiting for someone to appear
with an offer. 
    "Telling us that 'the Board is always open to fielding
offers and exploring alternatives' is not a sufficient
response," the letter said. 
     Ancora's hedge fund unit, led by James Chadwick, has become
a top activist investor in recent years. In 2022, it secured
board seats at C.H. Robinson Worldwide, Mueller Water and Berry
Global while pushing auto salvage company IAA to sell itself. 
 (Reporting by Svea Herbst-Bayliss; Editing by Lincoln Feast and
Deepa Babington)
 ((svea.herbst@thomsonreuters.com; +617 856 4331; Reuters
Messaging: svea.herbst.thomsonreuters.com@reuters.net))