November 24, 2008

ISSUE 1246

The Lawrence Group, a Tennessee-based farming company, announced Nov. 20 that it has offered to buy U.S. Sugar for $300 per share. The company has made two previous unsuccessful offers to purchase U.S. Sugar.

The offer would come to about $588 million, which is much less than the $1.34 billion the state has indicated it would pay for U.S. Sugar's 181,000 acres.

In another development, although the state recently lowered its bid for U.S. Sugar and made the purchase one of land only, an independent financial advisor says the price should be lowered even more – by $400 million.

In a summary of its ''fairness opinion,'' an investment banking consultant hired by the South Florida Water Management District says the purchase price should be about 30 percent lower. The firm, Duff & Phelps LLC, says the package is worth $930 million -- not the $1.34 billion the state said last week it is willing to pay in a land-only deal. The price includes all of U.S. Sugar’s assets, not just the land. U.S. Sugar responded that the opinion was moot because it does not reflect the proposed deal as it now stands.

The document was posted Nov. 18 here.

A fairness opinion is an independent report on the value of an acquisition with regard to price and is designed to guide the purchase of an ongoing business. A fairness opinion is not an appraisal and is only one component of due diligence.

A full-day public SFWMD Governing Board workshop is scheduled for Dec. 2 to continue reviewing due diligence results, documents and information associated with the transaction. Presentations will be Web-cast at www.sfwmd.gov.