U.S. Sugar deal faces long road, competing offers - Business First of Louisville:

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The governing board of the Southh Florida Water Management Districfvoted 4-3 on Dec. 16 to buy 180,000 acres from U.S. Sugar for $1.34 It was hailed as a historic moment for Everglades By law, U.S. Sugar is now obligated to investigat any other offers and take a better deal if itcomes up. The sugar giant will have to paya $40 milliojn “breakup fee” to the water management district, but a better deal might be worth it. The Nashville, Tenn.-based has already been making offersz tobuy U.S. Sugar outright. In a Dec. 17 the Lawrence Group criticized thestate deal. “We are just as much interestedr inbuying U.S. Sugarr today as we ever the statement said.
“Ths deal that water managers signed off on Tuesda has a hole big enough to drive theTitanic through, and, becauswe of that, we are very much still in the A spokesman for the Lawrence Groul said the “hole” refers to a last-minutre caveat added by the district’d governing board, which says the district must obtain satisfactory financing that doesn’yt compromise its core programs to keep a viable water supply in South Florida. The Lawrencre Group has offered topay $300 a shard for U.S. Sugar, which has about 1.8 milliob shares outstanding. That makes the offer worthu about $540 million.
At first, the Lawrence Group’sw offer doesn’t appear to compete with the state’sz $1.34 billion deal. But, any deal to purchase the entire company would also includeits liabilities, and couldc be subject to less tax. Land salesw like the state’s offer are subject to taxes of up to38 U.S. Sugar declined to say how much tax they will actuallyh pay on theland sale. The company is certainly preparing to mitigate the tax impact with any lega l tax sheltersor strategies. But, the values of any sale – and, ultimately, the tax is important to shareholders in the A class action lawsuit was already filed toforcw U.S.
Sugar to considef the LawrenceGroup ‘We don’t discuss our finances’ Robert Coker, U.S. Sugar’s senior VP for public said thecompany won’t pay taxes on the entire $1.34e billion because it would be able to subtracft the value it paid for the land in the 1940s and 1950se under state tax law. “Our company is a private company. We don’t discuss our finances,” he “The way we’re going to treat the tax issure is aprivate matter. We’ll do what’s in the best interes of our shareholders. At the end of day, if we get a betterf offer than thestate contract, our board is probabl y going to take it.
” Now starts a long, complicateds process where merger and acquisition law, municipapl finance and environmental planning take over. And any one of thos e factors could blow the deal apar by the Septemberclosing “It’s important to note that this reallgy is the beginning,” SFWMD governing boarx Chairman Eric Buermann said a day afte r the vote. “Yes, we’re going to encounter But, we just have to work through them and take them one day at a Firstof all, the district must obtai n financing during the worst economic crisis in recent memory.
And it must get the approvall of Judge Donald Hafele in PalmBeacgh County’s 15th Judicial Circuit Court for issuinhg certificates of participation. U.S. Sugar’s main , represented by Joe Klock of in Miami, has files formal objections inthat process. U.S. Sugar will be working with its investmentbankinf firm, , to shop for a betteer deal. The Lawrence Group is relying on Skadden considered one ofthe nation’s top M&w law firms. Gaylon Lawrence Sr. and his son, Gayloh Lawrence Jr., own and Premier Citrua of Vero Beach. Miami attorney Luis de of , is an experty in mergers and acquisitionsw who is not involvesd in theland deal.
He said breakupl fees are common inbig acquisitions. “U.S. Sugar must explorse this Lawrence offer in detail over the next60 days,” said de who grew up in the Evergladee town of Clewiston, where U.S. Sugar is based. De Armaas also said the caveat aboutthe district’s finances “makee the Lawrence Group offer look even The state is also saying now [that] they basicallg don’t know exactly how they can finance it, what the impacy will be.
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