Plant-Tech Firm Benson Hill Going Public in $2 Billion SPAC Merger

Benson Hill Inc. is going public by merging with a special-purpose acquisition company in a deal that values the plant-growing technology firm at $2 billion, the companies said.

The operator of a platform that uses machine learning, simulations and genetics to optimize plant growth, Benson Hill is combining with the SPAC Star Peak Corp. II. STPC -0.20% Benson Hill says it can develop breeds of crops like soybeans and yellow peas that mature faster, have higher protein content or taste better, saving growers time and resources.

Such ingredients are key for plant-based meat alternatives, and the company is also developing products for animal feed. Cheaper, more-sustainable plant-growing methods are needed to feed the world’s growing population and accelerate the fight against climate change, analysts say.

The St. Louis-based company expects to begin commercial production of its ultrahigh-protein soybean by next year and is developing a yellow-pea protein concentrate. It also has a unit that sells fresh produce to grocery stores and food distributors. The roughly $625 million in expected cash proceeds from the deal will accelerate Benson Hill’s bid to bring down plant-based food costs, Chief Executive Matt Crisp said in an interview.

“It’s positioning us to really gear shift into another level of growth,” he said.

Founded in 2012, Benson Hill expects last year’s sales of about $100 million to surge as it provides more products to food companies, restaurants and grocery stores.

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Existing investors in the company include GV—the venture-capital arm of Alphabet Inc. —and agricultural trading giants Bunge Ltd. and Louis Dreyfus Co. Investors including funds managed by BlackRock Inc., Van Eck Associates Corp., Hedosophia and Lazard Asset Management are putting money into the deal through a $225 million private investment in public equity, or PIPE, associated with the merger. Those funds and money held by the SPAC are expected to yield the roughly $625 million in cash proceeds.

Benson Hill joins the group of early-stage companies tied to sustainability, such as vertical-farming company AeroFarms, that are raising money and going public through SPACs.

“If you’re serious about decarbonizing the economy, you have to decarbonize [agriculture],” said Mike Morgan, chairman of the Star Peak Corp. II SPAC and chief executive of asset manager Triangle Peak Partners LP.

Star Peak II is the second blank-check firm backed by Mr. Morgan—a former executive at energy infrastructure firm Kinder Morgan Inc. —and investors at the hedge fund Magnetar Capital. The team’s first Star Peak SPAC recently took clean-energy storage firm Stem Inc. public.

Magnetar is among the biggest SPAC investors and had nearly $2.9 billion in blank-check company holdings at the end of 2020, according to a compilation of regulatory filings by data provider SPAC Research.

Private companies are flooding to special-purpose acquisition companies, or SPACs, to bypass the traditional IPO process and gain a public listing. WSJ explains why some critics say investing in these so-called blank-check companies isn’t worth the risk. Illustration: Zoë Soriano/WSJ (Originally published Sept. 30, 2020)

SPACs like Star Peak II are shell companies that list on an exchange to acquire a private firm and take it public. They are also called blank-check companies. Merging with a SPAC has become a common way for startups to raise large sums and access investors who are excited about themes like sustainability. One reason is that SPAC mergers let startups make rosy projections about their business, which aren’t allowed in a normal initial public offering.

SPAC executives argue that they are accelerating growth for technology-driven businesses that could eventually change the world. Skeptics contend that some low-revenue firms going public via blank-check companies aren’t ready to do so and could hit individual investors with losses if their technology fails. Concerns about tighter regulation and lofty valuations have in recent weeks dragged down shares of SPACs and companies they have taken public.

So far this year, SPACs have raised more than $100 billion, according to SPAC Research, surging past 2020’s record total of more than $80 billion.

After the deal closes later this year, Benson Hill is expected to trade under the ticker symbol “BHIL.”

Write to Amrith Ramkumar at amrith.ramkumar@wsj.com

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U.S. Pipeline Shutdown Exposes Cyber Threat to Energy Sector

The ransomware attack that forced the closure of the largest U.S. fuel pipeline this weekend showed how cybercriminals pose a far-reaching threat to the aging, vulnerable infrastructure that keeps the nation’s energy moving.

Colonial Pipeline Co. closed its entire 5,500-mile conduit carrying gasoline and other fuels from the Gulf Coast to the New York metro area Friday as it moved to contain an assault that involved ransomware, code that holds computer systems hostage. So far, no evidence has emerged that the attackers penetrated the vital control systems that run the pipeline, according to people familiar with the matter.

But the consequences of an infection spreading to that deeper layer are dire for any energy company. Many machines that control pipelines, refineries and power plants are well past their prime, have few protections against sophisticated attacks and could be manipulated to muck with equipment or cause damage, cybersecurity experts say.

The 5,500-mile Colonial Pipeline system carries roughly 45% of gasoline and diesel fuel consumed on the East Coast

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Last year, a ransomware attack moved from a natural-gas company’s networks into the control systems at a compression facility, halting operations for two days, according to a Department of Homeland Security alert. The company, which Homeland Security didn’t name, didn’t have a plan to respond to a cyberattack, the agency said.

The Colonial ransomware attack is a high-profile example of the online assaults that U.S. companies, schools, hospitals and other organizations now face regularly. It should also serve as a wake-up call for the energy industry’s particular exposure, according to consultants and others who work with companies to shore up cybersecurity.

U.S. and industry officials have known for years about such problems surrounding the nation’s energy infrastructure. A cybersecurity unit of Homeland Security said in 2016 it had worked to identify and mitigate 186 vulnerabilities throughout the energy sector, the most of any critical-infrastructure industry that year. In 2018, federal officials warned that hackers working for Russia had infiltrated the control rooms of U.S. electric utilities.

The energy industry is a big target. The U.S. has roughly 2.5 million miles of pipelines. Across that vast network are hundreds of thousands of devices—sensors that take myriad readings, valves that help control flow and pressure within a pipeline and leak detection systems—and all are vulnerable to attack, security experts said.

Propensity to be hit by ransomware across different sectors

Business & professional services

Central government

Technology & telecoms

Manufacturing & production

Energy, oil/gas & utilities

Healthcare

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Global average

Media, leisure & entertainment

Construction & property

Distribution & transport

Impact

of ransomware

Ransomware complaints filed with the FBI

Victim loss from ransomware attacks

Cybercriminals

succeeded in

encrypting data

$30 million

Attack stopped before

the data could be encrypted

Propensity to be hit by ransomware across different sectors

Business & professional services

Central government

Technology & telecoms

Manufacturing & production

Energy, oil/gas & utilities

Healthcare

Local government

Financial services

Global average

Media, leisure & entertainment

Construction & property

Distribution & transport

Impact

of ransomware

Ransomware complaints filed with the FBI

Victim loss from ransomware attacks

Cybercriminals

succeeded in

encrypting data

$30 million

Attack stopped before

the data could be encrypted

Propensity to be hit by ransomware across different sectors

Business & professional services

Central government

Technology & telecoms

Manufacturing & production

Energy, oil/gas & utilities

Healthcare

Local government

Financial services

Global average

Media, leisure & entertainment

Construction & property

Distribution & transport

Impact

of ransomware

Ransomware complaints filed with the FBI

Victim loss from ransomware attacks

Cybercriminals

succeeded in

encrypting data

$30 million

Attack stopped before

the data could be encrypted

Propensity to be hit by ransomware across different sectors

Business services

Central government

Technology

Manufacturing

Energy,

oil/gas & utilities

Healthcare

Global average

Local government

Financial services

Impact of ransomware

Cybercriminals

succeeded in

encrypting data

Attack stopped

before the data

could be encrypted

Ransomware complaints filed

Victim loss from ransomware attacks

$30 million

Refineries have even more valves and sensors than big pipelines, and there are about 135 of those across the country. That doesn’t include electric utilities and all the components of the sprawling power grid.

Colonial ferries 100 million gallons a day of gasoline, diesel and other refined petroleum products from the country’s chief refining corridor along the Gulf Coast to Linden, N.J. It transports roughly 45% of the fuel consumed on the East Coast, according to the company’s website.

Curtis Smith, a spokesman for Royal Dutch Shell PLC, one the owners of the Colonial Pipeline, said Sunday it is still too early to “be specific about potential impacts to product flow.” He said Shell is actively engaged with Colonial.

The trade group American Petroleum Institute said it was closely monitoring the pipeline situation and that cybersecurity is a top priority for the energy industry.

API members are engaged continuously with the Transportation Security Administration, Cybersecurity and Infrastructure Security Agency and the Energy Department to “mitigate risk and fully understand the evolving threat landscape,” said Suzanne Lemieux, API’s manager of operations security and emergency response policy.

The type of attack that occurred against Colonial Pipeline is becoming more frequent and is something that businesses need to be concerned with, Commerce Secretary Gina Raimondo said Sunday.

Cyberattacks and the Energy Sector

The attacks are “here to stay and we have to work in partnership with businesses to secure networks, to defend ourselves against these attacks,” she said on CBS’s “Face the Nation.” Specific to the Colonial attack, “it’s an all-hands-on-deck effort right now.”

In response to the Colonial Pipeline shutdown, the Transportation Department’s Federal Motor Carrier Safety Administration said Sunday that it has issued a temporary hours of service exemption for trucks transporting gasoline and other refined products across 17 states, including Georgia, South Carolina, North Carolina and Tennessee. The move would allow flexibility for truckers delivering fuel, White House press secretary Jen Psaki said in a tweet.

On Sunday, Colonial didn’t provide a timeline for bringing the pipeline back into service but said that while its main lines remained offline, some smaller lateral lines between terminals and delivery points were once again operational. It said it was working to restore IT systems and developing a plan to start the pipeline back up when it had approval from federal regulators.

As markets opened Sunday evening, gasoline futures were up about 1.6% at $2.16 a gallon, after briefly rising more than 3% higher.

Analysts said a closure of the pipeline for a few days shouldn’t have dramatic market impacts, because inventories of gasoline have been readied for the summer driving season and usually get replenished every five to six days. But if the pipeline remains offline for five days or longer, shortages could begin to affect retail stations and consumers along the East Coast, they said.

According to a report by an International Business Machine Corp. unit, energy companies in 2020 sustained the third-most attacks of any industry, up from ninth the previous year, as cybercriminals ramped up assaults on firms with software connected to operational control systems.

The industry is ill-prepared for such attacks, security experts said. Some operational technologies—for physical systems like pipelines and the electric grid—have protocols that predate those for the internet, said Padraic O’Reilly, co-founder and chief product officer of Boston-based CyberSaint Security, who works with pipelines and critical infrastructure on cybersecurity.

“There are just as many [operational technology] vulnerabilities as there are IT vulnerabilities, but they’re scarier in a way because they can go cyber to physical,” Mr. O’Reilly said, noting the energy sector has the most physical infrastructure of any industry that his company works with.

These weak spots have been known for years, but most energy companies have only recently begun to implement defenses, such as firewalls, to protect control systems, said Raymond Sevier, a technical solutions architect with Cisco Systems Inc., who focuses on industrial systems.

The control systems were considered safe for years because they weren’t connected to the internet, but hackers have found ways to penetrate them through unsecured remote access and networked systems. Many companies have older, vulnerable Windows platforms still embedded within energy facilities, and efforts to implement cybersecurity measures rarely move beyond the pilot-program stage, Mr. Sevier said.

Because many industrial facilities run around the clock, it isn’t easy to take down plants to patch outdated systems, keeping older machines in place and providing “the perfect path for cyber pathogens” once they are connected to company networks, said Grant Geyer, chief product officer of Claroty Ltd., a cybersecurity company that specializes in critical infrastructure environments.

Energy companies and other firms that operate infrastructure have invested heavily in recent decades to automate their processes and reduce costs, said Mark Montgomery, former executive director of the Cyberspace Solarium Commission, a bipartisan policy group formed by Congress.

“It’s not matched by a similar investment in cybersecurity,” Mr. Montgomery said. “It’s creating a lot of risk and vulnerability that, obviously, criminals can exploit.”

Two people briefed on the Colonial Pipeline probe said the attack appeared to be limited to information systems and had not infiltrated control systems. U.S. cybersecurity firm FireEye Inc. was investigating the attack, according to people familiar with the matter.

It is unclear how long it could take to bring the Colonial Pipeline back into service, said Robert M. Lee, founder of the industrial cybersecurity firm Dragos Inc.

IT security incidents can typically take days to resolve, while an attack on control systems can take weeks, given the average age and complexity of those technologies and their proximity to core operations, Mr. Lee said.

Many companies, Mr. Lee said, have underinvested in operational technology security, and U.S. officials have largely pushed firms to focus on measures to prevent attacks. That approach has left gaps in some businesses’ ability to detect and respond to successful hacks, he said.

“Everything we’ve told our asset owners has been focused on preventive [security],” he said. “We need to shift that and focus on the whole approach.”

Write to Collin Eaton at collin.eaton@wsj.com, James Rundle at james.rundle@wsj.com and David Uberti at david.uberti@wsj.com

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Stock futures hold steady as investors eye pipeline cyberattack

Michael Nagle | Bloomberg | Getty Images

Futures contracts held steady at the start of the overnight session Sunday evening, suggesting that the major U.S. equity indexes could trade at or near records when regular trading opens in New York.

Dow futures gained 35 points, while those linked to the S&P 500 rose 0.1%. Nasdaq 100 futures added 0.2%.

The moves in extended trading came after last week’s trading ended on an upbeat note with both the Dow Jones Industrial Average and the S&P 500 hitting fresh all-time highs on Friday.

Last week, the Dow rallied 2.7% and the S&P 500 gained 1.2%. Despite a 0.9% rally on the week’s final session, the Nasdaq Composite shed 1.5% over the same period.

The late-week optimism came despite a far-weaker-than-expected April jobs report, which showed that U.S. employers added 266,000 net payrolls last month. Economists polled by Dow Jones had expected 1 million additions.

Mike Wilson, chief U.S. equity strategist at Morgan Stanley, noted that traders appear to have already priced a robust economic reopening thanks to declining Covid-19 cases. Any news that could threaten that narrative could quickly impact where portfolio managers allocate cash

“We’re watching expectations vs reality with the market now well priced for reopening. On a cumulative basis, retail sales are above where they would have been on pre-COVID trends – suggesting some expectations risk around the pent up demand narrative,” Wilson wrote over the weekend.

“The labor market has less slack than is typical at this point in the cycle,” he added. “We recommend moving up the quality curve and adding more defensive balance as the market shifts toward mid-cycle leadership.”

A ransomware attack forced the closure of the largest U.S. fuel pipeline over the weekend. Colonial Pipeline, which operates a 5,500-mile system, said it was forced to halt the transport of fuel from the Gulf Coast to the New York metro area on Friday as it “took certain systems offline to contain the threat.”

The ultimate impact of the attack on fuel prices remains unclear, and analysts say the length of the shutdown will have the greatest impact. 

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Gasoline futures jump as much of vital pipeline remains shutdown following cyberattack

Signage is displayed on a fence at the Colonial Pipeline Co. Pelham junction and tank farm in Pelham, Alabama, U.S., on Monday, Sept. 19, 2016.

Luke Sharrett | Bloomberg | Getty Images

Fuel prices jumped in trading on Sunday night, as much of one of the largest pipelines in the U.S. remains closed following a cybersecurity attack.

West Texas Intermediate crude futures, the U.S. oil benchmark, advanced 47 cents to $65.37 per barrel. International benchmark Brent crude traded at $68.76 per barrel, for a gain of 48 cents. Natural gas futures were at $2.96 per million British thermal units, while gasoline futures jumped 3% to $2.193 per gallon.

Colonial Pipeline said Sunday evening that some of its smaller lateral lines between terminals and delivery points are once again online, but that its mainlines are still shut down.

“We are in the process of restoring service to other laterals and will bring our full system back online only when we believe it is safe to do so, and in full compliance with the approval of all federal regulations,” the company said in a statement.

How quickly service is restored to the pipeline remains the crucial factor to watch. While tank farms typically have a few days of stored fuel supply, a prolonged outage could lead to a spike in fuel prices.

Colonial Pipeline, which operates the largest pipeline carrying fuel from the Gulf Coast to the Northeast, “halted all pipeline operations” on Friday night as a proactive measure following a ransomware cyberattack.

The pipeline is a crucial part of U.S. petroleum infrastructure, transporting around 2.5 million barrels per day of gasoline, diesel fuel, heating oil and jet fuel. The pipeline encompasses more than 5,500 miles and carries nearly half of the East Coast’s fuel supply. The system also provides fuel for airports, including in Atlanta and Baltimore.

“Without this, there’s no transportation in the region, so it’s critical the pipeline return to service as soon as possible,” said Patrick De Haan, head of petroleum analysis at GasBuddy. “The impacts will ramp up potentially exponentially after around day 5 or so,” he added.

President Joe Biden was briefed on the pipeline closure Saturday morning, and the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency is coordinating with Colonial Pipeline.

U.S. Commerce Secretary Gina Raimondo said Sunday that it’s an “all hands on deck effort right now.”

“We’re working closely with the company, state and local officials to make sure that they get back up to normal operations as quickly as possible and there aren’t disruptions to supply,” she told CBS’ “Face the Nation.”

The pipeline outage comes as Americans are beginning to travel again as restrictions are lifted and the Covid vaccination rollout accelerates. On Friday the TSA screened more than 1.7 million passengers, the highest in more than a year.

“The Colonial outage comes at a critical juncture for the recovering U.S. economy: the start of the summer driving season,” noted ClearView Energy Partners. “A sustained disruption that leads to a significant pump price spike could increase prospects of domestic policy interventions,” the firm added.

The national average for a gallon of gas stood at $2.962 on Sunday, up 60% from a year ago, according to AAA.

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– CNBC’s Emma Newburger contributed reporting.

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