REG enters industrial biotech with LS9 acquisition
Renewable Energy Group, Inc., (REG) has announced that it has acquired renewable chemical technology developer LS9, Inc. The acquisition provides REG with a renewable chemicals platform for its newly formed REG Life Sciences, LLC.
US-based biodiesel producer Renewable Energy Group, Inc., (REG) has announced that it has acquired renewable chemical technology developer LS9, Inc providing the company with a renewable chemicals platform. For a purchase price of up to US$61.5 million, the deal consists of up front and earnout 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.
According to a statement, LS9, Inc., is a technology leader in the commercial development of a growing portfolio of sustainable products to meet the needs of chemical and fuel markets worldwide since 2005 and owns and operates a demonstration production facility in Okeechobee, Florida.
This acquisition is a major step in realising REG’s strategy to expand into the production of renewable chemicals and other products. 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, said Daniel J. Oh, Renewable Energy Group President and CEO.
Headquartered in Ames, Iowa, REG currently owns and operates eight active biodiesel refineries in four states with a combined nameplate production capacity of 257 million US gallons (≈ 972.85 million litres) and distributes biodiesel through a national network of distribution terminals, distributors and customers.
LS9’s proprietary 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 utilise diverse feedstocks including conventional corn and cane sugars, low-cost crude glycerin from biodiesel production, and cellulosic sugars. LS9 is a cornerstone investment for REG Life Sciences, which also plans to develop adjacent and complementary fermentation technologies.
LS9 is a leader in developing technology for the next generation of chemicals and fuels to be produced from renewable feedstocks rather than petroleum. REG’s proven capabilities, track record for execution, and access to lower cost feedstock make it an ideal partner to commercialise LS9’s technology, said Vinod Khosla, founding partner of Khosla Ventures, an investor in LS9.
Under the terms of the agreement between REG and LS9, REG paid US$15.3 million in cash and issued 2.2 million shares of REG common stock, valued at approximately US$24.7 million based on a trading average for REG stock at closing. In addition, REG may pay up to US$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 development and commercialization of products from LS9’s technology.