Dec. 31, 2014, 11:36 AM
- Pacific Ethanol (PEIX -5%) is merging with Midwestern ethanol maker Aventine Renewable Energy in an all-stock deal. Pacific is issuing 17.75M shares (current value of $181M), and assuming $135M in term loan debt.
- Aventine's production capacity (spread out over four mills) totals 315M gallons/year, handily eclipsing Pacific's 200M. After factoring Pacific's ethanol marketing ops, the company expects to sell 800M+ gallons of ethanol annually post-merger (#5 in the U.S.).
- Pacific: "With this transaction, Pacific Ethanol strengthens its unique production and marketing advantages by diversifying into two additional discrete markets and connecting its Western markets with Aventine's Midwest and Eastern markets." The deal is expected to close in Q2 2015.
- Shares have sold off after initially trading higher in response to the deal.
PEIX vs. ETF Alternatives
Pacific Ethanol Inc is engaged in producing and marketing low-carbon renewable fuels in the Western United States. It also sells ethanol co-products, including wet distillers grain, a nutritious animal feed, and corn oil.
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