US Ethanol Giant Faces Potential Sale After CEO Stepped Down

(Bloomberg) -- When Todd Becker took the top job at Green Plains Inc., one of the US’s largest ethanol producers, it was 2009 and the nation had just announced an expansion of its biofuels mandate two years earlier.

Fast forward to 2025 and the US is again in the midst of another biofuels boom, but one that Becker simply couldn’t capitalize on fast enough. After a 38% drop in the share price this year, Becker announced on Friday that he was stepping down, prompting fresh speculation of a sale.

Dwight Anderson, the founder of Ospraie Management LLC who teamed up with Green Plain in 2021 to overhaul the company, said the ethanol maker could be worth more if it was sold. Jordan Levy, an analyst at Truist Securities, said a takeover is now more likely. 

They are not alone: activist investor Ancora Holdings Group first urged Green Plains to consider a sale in 2023. Back then, the group noted the company could benefit from the nascent market for renewable diesel with its production of corn oil, while the ethanol market continued to struggle.

“Being able to crack a kernel of corn the way you can a barrel of oil is going to be critical to the survival of these assets,” Anderson said in an interview on Sunday. A big oil or a large agriculture commodities trader “could take advantage of the different economic streams that Green Plains assets are capable of,” he said.

Becker didn’t respond to calls seeking comment. Ancora declined to comment.

The US ethanol industry was born out of government support. In the 1970s, President Jimmy Carter asked agribusiness leaders to make biofuels to reduce petroleum dependence, with Archer-Daniels-Midland Co. starting production in 1978. But it wasn’t until 2005 that the industry started to take off, with the US making it mandatory for oil refiners to blend ethanol into gasoline.

In 2007, producers of the corn-based fuel got another boost: the Renewable Fuels Standard law was expanded to increase the mandate every year.

For Becker, who took over as CEO two years later, the decision meant a bright future ahead. So he built Green Plains with a simple strategy: buying up rival ethanol plants on the cheap and converting them for low-cost manufacturing. By 2013, the company was the fourth-largest ethanol producer in the US.

Big Oil

The industry soon came under attack by oil refiners and lawmakers on both sides of the aisle seeking to kill the US government mandate. Ethanol had become an expensive proposition, with a food-price surge sparking riots around the world a few years earlier, and many blaming biofuels for the increase. Even environmentalists were starting to turn against it, with many questioning ethanol’s green credentials.

But Becker still believed in it. In 2014, he said Green Plains had potential to grow into a $20 billion company. As of Friday, its market capitalization was about $380 million.

“Any CEO for a startup industry is inherently an entrepreneur and entrepreneurs are inherently optimistic,” Anderson said. “While he didn’t do a perfect job, he’s done a very commendable job in terms of keeping Green Plains alive through the course of multiple cycles.”

The outlook for ethanol, which had already taken a hit after President Barack Obama lowered quotas for the corn-based fuel, faded further under Donald Trump’s first term amid fierce policy battles between Big Oil and Big Agriculture. China was also absent as a buyer due to the trade war.

To make matters worse, the rise of electric vehicles had just started to pose a serious existential threat to all liquid fuels. 

That’s when Becker finally lost hope in the industry, setting course to wean Green Plains off the very product it had relied on for most of its history. He invested in everything from high-quality proteins to fish feed and alcohol for disinfectants — something that brought a mini boom during the pandemic due to surging demand for hand sanitizers. 

Clean Sugar

More recently, though, the company is betting on its clean sugar technology used to make things like bioplastics. It’s also counting on selling high-protein ingredients and corn oil as well as curbing its carbon footprint to turn its fortune around. The plans, which Becker referred to as the “four pillars,” followed the acquisition of Fluid Quip Technologies in partnership with Ospraie.

But benefits of the new investment were slow to materialize, with the company only being able to run its clean sugar production at a third of the capacity, Andrew Strelzik, an analyst at BMO Capital Markets, said in a report before Becker stepped down. 

Green Plains lost money for six consecutive years, and Wall Street was already expecting another loss in 2025 as the “ethanol outlook remains challenged” due to high corn prices, overproduction and uncertain demand, Strelzik said.

“The industry has been hard and the share price is self evident,” Anderson said. “You have negative demand growth for gasoline.”

Activist Investor

By 2023, Ancora was urging Green Plains to explore a sale. In a letter to the ethanol maker, the group said shortages of renewable diesel feedstocks like corn oil were attracting “very healthy multiples” for companies just like Green Plains. It also added that the time to capitalize on it would be the next 12 months.

But Becker didn’t sell the company. And while the board is still reviewing the possibility of a deal, shares started to collapse. Green Plains stock never overtook the record high of $63.50 on March 15, 2006, the first day of trading on Nasdaq. 

Wall Street now wants more. Anderson said the company could easily be worth two to three times the current share price with the right replacement for Becker. For Levy, the recently announced cost cuts at Green Plains increase its attractiveness.

“We’d now see a potential take-out as even more likely,” he said in a report on Sunday.

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