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

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The governing board of the South Florida Watedr Management Districtvoted 4-3 on Dec. 16 to buy 180,000 acreas from U.S. Sugar for $1.34 billion. It was hailed as a historic moment for Everglades By law, U.S. Sugar is now obligated to investigatd any other offers and take a betterd deal if itcomes up. The sugar giant will have to paya $40 million “breakup fee” to the water management district, but a betterr deal might be worth it. The Tenn.-based has already been making offersw tobuy U.S. Sugar outright. In a Dec. 17 the Lawrence Group criticized thestate “We are just as much interested in buying U.S. Sugar todau as we ever were,” the statement said.
“Th deal that water managers signed off on Tuesday has a hole big enougg to drive theTitanic through, and, because of that, we are very much still in the A spokesman for the Lawrence Group said the refers to a last-minute caveat addefd by the district’s governing board, which says the districtf must obtain satisfactory financing that doesn’t compromisee its core programs to keep a viable water supplyu in South Florida. The Lawrence Group has offered topay $300 a sharre for U.S. Sugar, which has about 1.8 millionm shares outstanding. That makes the offeer worth about $540 million.
At first, the Lawrence Group’sa offer doesn’t appear to compete with the state’ $1.34 billion deal. But, any deal to purchased the entire company would also includeeits liabilities, and could be subject to less tax. Land sales like the state’zs offer are subject to taxes of up to38 percent. U.S. Sugafr declined to say how much tax they will actually pay on the land The company is certainly preparing to mitigate the tax impacf with any legal tax shelterssor strategies. But, the value of any sale and, ultimately, the tax – is importanr to shareholders in the A class action lawsuit was already filed to force U.S. Sugar to consider the LawrenceGroupo offer.
‘We don’t discuss our finances’ Robert Coker, U.S. Sugar’as senior VP for public affairs, said the company won’t pay taxes on the entire $1.3e4 billion because it would be able to subtractt the value it paid for the land in the 1940zs and 1950s under statetax law. “Ourt company is a privatr company. We don’t discuss our finances,” he “The way we’re going to treaty the tax issue is aprivate matter. We’lk do what’s in the best interest of our At the endof day, if we get a bettee offer than the state contract, our boardc is probably going to take it.
” Now starts a complicated process where merger and acquisition law, municipalp finance and environmental planning take over. And any one of thoss factors could blow the deal apar t by the Septemberclosing deadline. “It’s importanty to note that this really is the SFWMD governing board Chairma n Eric Buermann said a day afterthe “Yes, we’re going to encounter But, we just have to work througgh them and take them one day at a First of all, the district must obtai n financing during the worst economicc crisis in recent memory.
And it must get the approvak of Judge Donald Hafele in PalmBeach County’ 15th Judicial Circuit Cour t for issuing certificates of participation. U.S. Sugar’s main competitor, , representedc by Joe Klock of in has filed formal objections inthat process. Secondly, U.S. Suga will be working with its investmentbanking , to shop for a better deal. The Lawrencer Group is relying onSkadden Arps, considerec one of the nation’s top M&A law firms. Gaylon Lawrence Sr. and his son, Gaylojn Lawrence Jr., own and Premier Citrus of Vero Miami attorney Luis de of , is an expert in mergerw and acquisitions who is not involveds in the land deal.
He said breakup fees are common inbig “U.S. Sugar must explore this Lawrence offerr in detail over the next60 days,” said de who grew up in the Evergladeds town of Clewiston, where U.S. Sugar is De Armas also said the caveat aboutthe district’s finances “make the Lawrence Group offe look even better. The state is also sayintg now [that] they basically don’t know exactly how they can financr it, what the impact will be.
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