Financially strong ethanol producer Granite Falls Energy has acquired a controlling stake in the struggling ethanol plant at Heron Lake, Minn., for $17 million.

The deal, disclosed in regulatory filings, means that Granite Falls' management team, led by CEO Steve Christensen, will also manage the Heron Lake BioEnergy plant, which has reported losses for seven quarters in a row.

It is the latest sign of consolidation in the ethanol industry, which in the past year also has seen major producers Flint Hills Resources and Green Plains Renewable Energy acquire struggling plants in Iowa and Nebraska.

Granite Falls Energy acquired its stake in the Heron Lake plant from the investment group of Roland and Diane Fagen, executives and co-owners of Fagen Inc., the Granite Falls, Minn., construction company that built both plants. The Fagens retain a minority stake in Granite Falls Energy.

Heron Lake BioEnergy, facing losses and high debt, had been looking for a buyer, and earlier this year announced a deal to sell the plant to another group of ethanol producers for $55 million. That deal fell through in April, and the company had been looking to raise $12 million in fresh capital from its local owners.

"We're going to share some management and bring some stability," Christensen said in an interview Wednesday. "We'll look at the synergies."

He said the two plants may consider combining marketing of ethanol, sharing rail cars and other business activities. This is the first acquisition by Granite Falls Energy, which also is locally owned and earned $3 million in the most recent quarter. Christensen said the acquisition was funded out of Granite Falls Energy's balance sheet.

Under the deal that closed last week, Granite Falls Energy acquired the Fagen investment group's interest in Heron Lake BioEnergy for $8 million in cash, a $4 million note to the Fagens and assumption of a $5 million note held by Granite Falls Bank.

Heron Lake is 95 miles south of Granite Falls in southwestern Minnesota. The two plants will remain as separate companies, with two groups of investors. But Granite Falls Energy now holds a majority of seats on the Heron Lake BioEnergy board.

The Heron Lake plant, with the capacity to produce 50 million gallons of ethanol per year, is slightly smaller than the Granite Falls operation. Both plants use production technology from ICM Inc. of Colwich, Kan. Together the plants employ more than 70 people, Christensen said.