Pacific Ethanol Inc., the Sacramento marketer and producer of low-carbon renewable fuels, announced Wednesday that it has entered into a merger agreement with an Illinois-based ethanol producer.
PEI said it will acquire all of the outstanding shares of Aventine Renewable Energy Holdings Inc. in a stock-for-stock merger transaction valued at nearly $200 million. In effect, it’s an acquisition; Aventine will be operated as Pacific Ethanol’s wholly owned subsidiary.
In a statement accompanying the announcement, PEI CEO Neil Koehler said the transaction “will more than double our annual ethanol production capacity, and it will establish Pacific Ethanol as the fifth largest producer and marketer of ethanol in the United States.”
The deal is subject to standard closing conditions, regulatory approvals and consent by the boards of both companies. PEI expects the transaction to close during the second quarter of 2015.
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PEI said the combined company will have a total ethanol production capacity of 515 million gallons per year.
Aventine, based in Pekin, Ill., currently serves the nation’s Midwest and Eastern markets. It has ethanol-production facilities in Nebraska and also does coal-to-natural-gas conversions at its Pekin plant.
Under the merger agreement, PEI said it expects to issue approximately 17.75 million shares of its common stock upon closing, in exchange for all the issued and outstanding shares of Aventine’s common stock.
Upon completion, existing PEI shareholders will own about 58 percent of the issued and outstanding shares of common stock of the combined entity. Aventine will nominate two representatives to be named to PEI’s board of directors.
Shares of PEI rose 7 cents to $10.40 a share Wednesday in after-hours trading on the Nasdaq market, down from a close of $10.71 in the previous trading session. Shares of Aventine, which trades over the counter, jumped by $3.10, or more than 34 percent, to close Wednesday at $12.10 a share.
Call The Bee’s Mark Glover, (916) 321-1184.