Late Wednesday afternoon, Pacific Ethanol Inc. (NASDAQ: PEIX) announced that it had entered a definitive merger agreement with a Midwest-based producer of ethanol, Aventine Renewable Energy Holdings, in an all-stock deal valued at approximately $190 million. The combination will more than double Pacific Ethanol’s production capacity and create the fifth-largest ethanol maker in the United States.
Aventine, like Pacific Ethanol, was a high-flying, NYSE-traded alternative energy company in the middle of the last decade. In 2009, Aventine filed for bankruptcy protection and began trading in the over-the-counter market. The company emerged from bankruptcy in 2010.
Thin margins due to the falling price of crude have stressed ethanol makers in the second half of 2014, which is probably what made this deal attractive to both parties. Pacific Ethanol got a good price and Aventine survived.