A Buyer for Verasun?

So, will it be privately held POET or Archer Daniels Midland (NYSE:ADM) that vault to the top of the ethanol food chain?

Bankrupt U.S. ethanol maker VeraSun Energy Corp. (OTC:VSUNQ), (NYSE:VSE) said it recently received a “non-binding indication of interest” from an unidentified third party to acquire substantially all of VeraSun’s assets.

"The indication of interest received by the company is subject to significant conditions, and there can be no assurance that it will result in the consummation of a transaction, that the company will receive any other offers or indications of interest, that the company will be able to complete any alternative transaction or that any transaction or transactions would generate proceeds sufficient to satisfy the claims of all of the company's stakeholders," VeraSun said in a press release.

The company said that due to confidentiality considerations it cannot disclose the identity of the third party and also the terms of its indication of interest.

POET LLC's chief executive, Jeff Broin, said lat week his company "is in serious discussions with a couple of ethanol producers regarding possible acquisitions," but refused to say whether bankrupt VeraSun is a potential target, citing “confidentiality agreements.”

POET, which in 2007, was the largest U.S. ethanol producer, has long been on the short list of potential acquirers of VeraSun, according to analysts. Also on the list is Archer Daniels Midland who recently said they were looking at "distressed assets".

This has been overdue for a while. Scale will win in the long run just as it does in the oil business with the likes of Exxon (NYSE:XOM), Chevron (NYSE:CVX) and BP (NYSE:BP). The larger ethanol producers become, their cost per gallon drops.