Biodiesel firm acquires LS9 for $61 million
04:53 AM | January 22, 2014 | Rebecca Coons
Biodiesel producer Renewable Energy Group (Ames, IA) today announced it has acquired renewable chemical technology developer LS9 for a purchase price of up to $61.5 million, consisting of up front and earn-out payments, in stock and cash.
Most of the LS9 team, including the entire R&D leadership group, will join the newly named REG Life Sciences, LLC, which will operate out of LS9’s headquarters in South San Francisco, CA.
“This acquisition is a major step in realizing REG’s strategy to expand into the production of renewable chemicals and other products,” says Daniel J. Oh, Renewable Energy Group President and CEO. “The industrial biotechnology platform and robust patent portfolio LS9 has been building will now be combined with REG’s proven production and commercialization capabilities to accelerate the commercial introduction of renewable chemicals to meet increasing customer demand for sustainable products.”
LS9’s technologies harness the efficiency of the fatty acid metabolic pathway of microorganisms and are expected to make a wide range of renewable chemicals for large, diverse markets such as detergents and personal care, as well as renewable fuels. LS9’s technology platform can utilize diverse feedstocks including conventional corn and cane sugars, low-cost crude glycerin from biodiesel production, and cellulosic sugars.
“LS9 is a leader in developing technology for the next generation of chemicals and fuels to be produced from renewable feedstocks rather than petroleum,” said Vinod Khosla, founding partner of Khosla Ventures, an investor in LS9. “REG’s proven capabilities, track record for execution, and access to lower cost feedstock make it an ideal partner to commercialize LS9’s technology.”
Under the terms of the agreement between REG and LS9, REG paid $15.3 million in cash and issued 2.2 million shares of REG common stock--valued at approximately $24.7 million based on a trading average or REG stock--at closing. In addition, REG may pay up to $21.5 million in cash and/or shares of REG common stock consideration for achievement of certain milestones over the next five years related to the developmenzt and commercialization of products from LS9’s technology.
REG, headquartered in Ames, IA, owns and operates eight active biodiesel refineries in four states with a combined nameplate production capacity of 257 million gallons and distributes biodiesel through a national network of distribution terminals, distributors and customers.