• Would be company’s first foray into food ingredient business
  • Company to sell $150 milion in notes to fund Abengoa purchases

Green Plains Inc. , the fourth-biggest U.S. ethanol producer, is planning to expand into the food business.

The distiller signed a non-binding agreement to pay between $225 million and $275 million for a “complementary” part of a food ingredients company, the Omaha, Nebraska-based company said in a regulatory filing on Tuesday. Green Plains also said in a separate filing that it plans to sell $150 million in convertible senior notes due in 2022 to help fund its purchase of two Abengoa SA ethanol plants it agreed to buy in June.

Green Plains is in preliminary talks with a potential seller regarding a stock purchase accord, it said, without identifying the company. It said it seeks to consummate the deal in the third quarter.

While this would be Green Plains’ first foray into the food ingredient business, it isn’t the first time that it’s expanded outside of ethanol. In June 2014, the company bought Supreme Cattle Feeders from Agri Beef Co.

In a November 2013 interview with Bloomberg Markets, Green Plains Chief Executive Officer Todd Becker said he envisioned building Green Plains into a larger company, mentioning bigger rivals Archer Daniels Midland Co.; Bunge Ltd.; Cargill Inc., and Louis Dreyfus Corp.

Goldman Sachs Co. last week reiterated a buy rating it has on the stock, citing Green Plains’ “favorable growth story.” The stock has climbed 15 percent in the past year.

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