Pacific Ethanol Buying Aventine to Double Output, Expand in U.S.

Pacific Ethanol Inc. will acquire rival producer Aventine Renewable Energy Holdings Inc. in an all-stock transaction, doubling production capacity and expanding its reach from the West Coast to the eastern U.S.

Pacific Ethanol will issue 17.75 million shares of common stock for all of Aventine’s shares, with Pacific Ethanol investors owning 58 percent of the combined entity on completion, the Sacramento, California-based company said in a statement today. Aventine has a market value of $2.5 million, according to data compiled by Bloomberg, and $135 million in debt.

The price of oil has plunged by more than half since July and ethanol has declined more than 20 percent over the same period.

The combined company will be able to produce 515 million gallons (2 billion liters) of ethanol a year and to market more than 800 million gallons, making it the fifth largest in the U.S., Pacific Ethanol said.

The deal is expected to close in the second quarter and is subject to regulatory approval. Aventine will nominate two people to Pacific Ethanol’s board, which will expand to nine.

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