On Wednesday, Green Plains, an ethanol producer and agri-tech company, announced its decision to commence a strategic review, a move that comes a year after activist investor Ancora urged its board to take such action.
The announcement, made alongside the company’s fiscal fourth-quarter results, prompted a significant surge in shares, which rose by over 15% during midday trading. Ancora, holding a 6.8% stake according to FactSet data, and Green Plains have additionally entered into a cooperation agreement, encompassing a standstill provision.
The company announced that it will conduct a strategic review to investigate potential value enhancements, which could extend to a merger or sale.
“The board has decided to review the company’s strategic alternatives to determine the best way for Green Plains and its shareholders to realize the full value of the transformation we have made and are continuing to make,” stated CEO Todd Becker in a press release.
In January 2023, Ancora penned a letter addressed to Green Plains’ board, endorsing Becker’s constructive involvement while asserting that the company’s true worth was being underestimated and advocating for the pursuit of a sales process.
Green Plains, originally established in 2004, had expanded its operations beyond the confines of pure ethanol production, venturing into the realms of clean sugar and corn oil production.
Ancora highlighted the potential of this diversification into agri-tech, emphasizing its capacity to yield high margins.
However, it contended that the prominence of the ethanol sector was obscuring “the value of its strategic and highly competitive co-products.” Hence, it pressed the company to contemplate a sale to a strategic purchaser.
Notably, Green Plains stands as one of the foremost domestic producers of ethanol, a fuel additive blended with gasoline to mitigate transportation emissions.
The United States holds a preeminent position in global ethanol production, as per data from the Department of Energy.
According to 13D Monitor, Ancora, an activist investor, has acquired stakes in a variety of companies such as Norfolk Southern, Disney, C.H. Robinson, and Hasbro. As of December, it oversees assets totaling $8.8 billion.
