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VeraSun Energy & US BioEnergy Announce Merger Agreement

December 04, 2007 by Jeff Shepard

VeraSun Energy Corp. and US BioEnergy Corp. announced that they have entered into a definitive merger agreement, which has been unanimously approved by the board of directors of each company. The merger is expected to close during the first quarter of 2008, pending shareholder approval, anti-trust regulatory clearance and the completion of other customary conditions.

Under the merger agreement, 0.81 share of VeraSun common stock will be issued for each outstanding share of US BioEnergy common stock, representing a premium of approximately 11% based on November 23, 2007, closing prices. The existing VeraSun shares will remain outstanding and will represent approximately 60% of the shares outstanding after the merger.

VeraSun Chairman, CEO and President Donald L. Endres will remain CEO of the combined company, and US BioEnergy President and CEO Gordon Ommen will serve as chairman following the closing of the merger. VeraSun Senior Vice President and Chief Financial Officer Danny C. Herron will become president of the combined company. The combined entity will retain the VeraSun name and trade under VeraSun’s existing NYSE ticker symbol, VSE.

"This merger is an opportunity for two leading companies in the renewable fuels industry to capitalize on synergies and provide value for shareholders," said Endres. "It also underscores the commitment of each company to execute on its growth strategy to become a large-scale, low-cost ethanol producer. We are pleased with the opportunity to build a very unique industry platform."

The merger is expected to create a stronger business platform by improving access to capital and allowing the combined company to leverage technology and operating experience across its entire plant fleet. The merger is also expected to be accretive to VeraSun’s earnings in the first full fiscal year of combined operations, and the combined company is projected to have a market capitalization of approximately $1.5 billion.

Upon completion of the merger, the combined company will have nine ethanol production facilities in operation and seven additional facilities under construction. By the end of 2008, the company is expected to have a total production capacity of more than 1.6 billion gallons per year (BGY) and 16 facilities constructed by Fagen, Inc. and utilizing ICM process technology. Through the merger, the employees of both companies will be integrated into a combined work force.

"We’re excited about the merger because it brings together two talented and high-performing teams whose passion is to reduce our nation’s dependence on foreign oil through the production of clean renewable biofuels," said Ommen. "By harnessing the collective strength of both organizations, we expect to reach 1.6 billion gallons of ethanol production capacity by the end of 2008, making us a global leader in ethanol production."

In connection with the merger, holders of a significant percentage of the outstanding shares of each company have agreed to vote in favor of the transaction.