Combination Expected to Reach Ethanol Production Capacity of More than 1.6 Billion Gallons by End of 2008
VeraSun Energy Corp. and US BioEnergy Corp. announced they have entered into a definitive merger agreement, which has been unanimously approved by the board of directors of each company. The merger is expected to close during the first quarter of 2008, pending shareholder approval, anti-trust regulatory clearance and the completion of other customary conditions.
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 Nov. 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 Chief Financial Officer 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.
“This merger is an opportunity for two leading companies in the renewable fuels industry to capitalize on synergies and provide value for shareholders,” says Endres. “It also underscores the commitment of each company to execute on its growth strategy to become a large-scale, low-cost ethanol producer. We are pleased with the opportunity to build a very unique industry platform.”
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 is expected to have a total production capacity of more than 1.6 billion gallons per year and 16 facilities constructed by Fagen, Inc. and utilizing ICM process technology. Through the merger, the employees of both companies will be integrated into a combined work force.
“We’re excited about the merger because it brings together two talented and high-performing teams whose passion is to reduce our nation’s dependence on foreign oil through the production of clean renewable biofuels,” says Ommen. “By harnessing the collective strength of both organizations, we expect to reach 1.6 billion gallons of ethanol production capacity by the end of 2008, making us a global leader in ethanol production.”
In connection with the merger, holders of a significant percentage of the outstanding shares of each company have agreed to vote in favor of the transaction.
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 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 will have an annual production capacity of approximately 1 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% ethanol and 15% gasoline for use in flexible fuel vehicles, 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. For more information, please visit VeraSun’s Web sites at www.verasun.com or www.VE85.com.
About US BioEnergy Corporation
US BioEnergy Corporation, based in St. Paul, MN, 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.
Notes
In connection with the proposed transaction between VeraSun and US BioEnergy, VeraSun will file a registration statement on Form S-4 with the SEC. Such registration statement will include a joint proxy statement of VeraSun and US BioEnergy that also constitutes a prospectus of VeraSun, and will be sent to the shareholders of VeraSun and US BioEnergy. Shareholders are urged to read the joint proxy statement/prospectus and any other relevant documents when they become available, because they will contain important information about VeraSun, US BioEnergy and the proposed transaction. The joint proxy statement/prospectus and other documents relating to the proposed transaction (when they are available) can be obtained free of charge from the Securities and Exchange Commission (SEC) Web site at www.sec.gov. These documents (when they are available) can also be obtained free of charge from VeraSun upon written request to VeraSun Energy Corporation, Attention: Investor Relations, 100 22nd Avenue, Brookings, South Dakota 57006, or by calling 605-696-7236, or from US BioEnergy, upon written request to US BioEnergy Corporation, Attention: Investor Relations, 5500 Cenex Drive, Inver Grove Heights, Minnesota 55077, or by calling 651-554-5491.
This document includes or incorporates by reference financial estimates and other forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These estimates and statements are subject to risks and uncertainties, and actual results might differ materially from these estimates and statements. Such estimates and statements include, but are not limited to, statements about the benefits of the merger, including future financial and operating results, the combined company’s plans, objectives, expectations and intentions, and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of the management of VeraSun and are subject to significant risks and uncertainties outside of its control.
The following factors, among others, could cause actual results to differ from those described in the forward-looking statements in this document: the ability to obtain governmental approvals of the merger on the proposed terms and schedule; the failure of VeraSun shareholders to approve the issuance of VeraSun common shares or the failure of US BioEnergy shareholders to approve the merger; the risk that the businesses of VeraSun and US BioEnergy will not be integrated successfully or as quickly as expected; the risk that the cost savings and any other synergies from the merger may not be fully realized or may take longer to realize than expected; disruption from the merger making it more difficult to maintain relationships with customers, employees or suppliers; and competition and its effect on pricing, spending, third-party relationships and revenues. Additional factors that may affect future results are contained in VeraSun’s and US BioEnergy’s filings with the SEC, which are available at the SEC Web site (http://www.sec.gov). VeraSun is not under any obligation, and expressly disclaims any obligation, to update, alter or otherwise revise any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future events or otherwise.