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Contributors: Douglas McIntyre Jon C. Ogg

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Monday, July 10, 2006

Andersons' Pre-Market Development

The Andersons, Inc (ANDE) is trading up over 3% pre-market on reports that it and Marathon Oil (MRO) have signed a letter of intent which could lead to the formation of a 50/50 joint venture that would construct and operate a number of ethanol plants. This is subject to board approvals, although that should be approved if the ethanol market opportunities of late have been any indicator.

What is interesting about the move, is that this part of the Andersons' plan for expansion (rail and ethanolplants) if you look at the company's recent news and capital plans. They announced plans to raise $100M in new equity via stock sales just back on June 30, so you should probably look for this secondary offering to price soon. On a split adjusted basis, ANDE shares are down roughly 1/3 to a $40.60 close Friday from the $60+ highs seen in early May.

Andersons' market cap is $617 million, and the company is profitable with a very manageable (for an ethanol play) 21 P/E ratio. It was founded in 1947 and divided into four business segments: Agriculture, Rail, Turf and Specialty, and Retail.

Jon C. Ogg
July 10, 2006

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