Green Plains to Acquire Cattle Feed Yards from Cargill
April 26 2017 - 9:00AM
Multiyear Offtake Agreement with Cargill Meat
Solutions for Future Cattle Production Green Plains Cattle Company
will be the Fourth Largest Cattle Feeder in the U.S.Acquisition
will be accretive to 2017 earnings
Green Plains Inc. (NASDAQ:GPRE) today announced that its
subsidiary, Green Plains Cattle Company, has entered into an asset
purchase agreement to acquire two cattle-feeding operations from
Cargill for $36.7 million, excluding working capital. The
transaction includes feed yards located in Leoti, Kan. and Yuma,
Colo. and will add capacity of 155,000 head to the company’s
operations. Upon completion of the acquisition, Green Plains Cattle
Company will become the fourth largest cattle-feeding operation in
the United States with total capacity of more than 255,000 head.
As part of the transaction, Green Plains Cattle will also enter
into a long-term supply agreement with Cargill Meat Solutions to
provide a reliable supply of cattle from the Leoti and Yuma
locations, as well as Green Plains’ existing feedlot in Kismet,
Kan., with appropriate flexibility and economic opportunities for
both parties.
“The growth of Green Plains Cattle achieves one of our strategic
initiatives of further diversifying our income streams and
investing in adjacent businesses. This purchase also aligns with
our overall strategy to meet growing global protein demand in
downstream markets that take advantage of our supply chain,
production platform and commodity management expertise,” commented
Todd Becker, president and chief executive officer of Green Plains.
“A key component of the acquisition is the long-term agreement with
Cargill under which Green Plains Cattle will be a strategic
supplier of their beef-packing demand.”
Green Plains Cattle Company currently owns a 70,000 head
cattle-feeding operation near Kismet, Kan. and a 30,000 head
operation near Hereford, Texas.
“One of the inherent benefits of this transaction is the scale
of internal demand for our co-products produced at company-owned
ethanol plants. Our cattle business will now consume more than 300
thousand tons of dried distillers grains and 40 million pounds of
corn oil annually,” Becker added. “The ability to effectively
control our feed supply cost provides our cattle business with a
strategic operating advantage resulting in more predictable and
stable cattle-feeding margins while enhancing Green Plains’
knowledge of ration dynamics. Since our entry into cattle feeding a
few years ago, the meat and protein market fundamentals have
remained favorable and the business has been accretive to Green
Plains’ earnings.”
The Leoti and Yuma cattle-feeding operations consist of
approximately 1,900 acres of land, supporting infrastructure and
feed storage assets, which are strategically located near major
meat packers. The transaction is anticipated to be accretive to
2017 earnings with completion expected in the next 30 days, subject
to customary closing conditions and regulatory approvals.
About Green Plains Inc.Green Plains Inc.
(NASDAQ:GPRE) is a diversified commodity-processing business with
operations related to ethanol production, grain handling and
storage, a cattle feedlot, vinegar production, and commodity
marketing and logistics services. The company is the second largest
consolidated owner of ethanol production facilities in the world
with 17 dry mill plants, producing nearly 1.5 billion gallons of
ethanol at full capacity. Green Plains owns a 62.5% limited partner
interest and a 2.0% general partner interest in Green Plains
Partners. For more information about Green Plains, visit
www.gpreinc.com.
Forward-Looking StatementsThis news release
includes forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995, as amended.
Forward-looking statements reflect management’s current views,
which are subject to risks and uncertainties including, but not
limited to, anticipated financial and operating results, plans and
objectives that are not historical in nature. These statements may
be identified by words such as “believe,” “expect,” “may,”
“should,” “will” and similar expressions. Factors that could cause
actual results to differ materially from those expressed or implied
include risks related to Green Plains’ ability to realize the
anticipated benefits of the feedlot acquisition and other risks
discussed in Green Plains’ reports filed with the Securities and
Exchange Commission. Investors are cautioned not to place undue
reliance on forward-looking statements, which speak only as of the
date of this news release. Green Plains assumes no obligation to
update any such forward-looking statements, except as required by
law.
Contact: Jim Stark, Vice President - Investor and Media Relations, Green Plains Inc. (402) 884-8700
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