Biodiesel giant expands to new markets
Source: Amanda Peterka, E&E reporter • Posted: Friday, January 24, 2014
Renewable Energy Group Inc. yesterday announced that it has purchased renewable chemical developer LS9 Inc. for $61.5 million. The biodiesel producer will rename the company REG Life Sciences LLC and work to develop renewable chemicals for markets such as detergents and personal care.
“This acquisition is a major step in realizing REG’s strategy to expand into the production of renewable chemicals and other products,” said Daniel Oh, Renewable Energy Group’s president and CEO.
Iowa-based Renewable Energy Group operates eight refineries in four states capable of annually producing 257 million gallons of biodiesel, a renewable fuel made from soybean oil, animal fats and used cooking grease.
REG paid $15.3 million up front for LS9 and issued 2.2 million shares of common stock valued at $24.7 million. Under the deal, the biodiesel producer may pay up to $21.5 million in cash or shares of stock depending on whether LS9’s technology hits certain development and commercialization milestones.
Over the past few years, San Francisco-based startup LS9 has developed technologies to produce drop-in fuel and chemicals from plants using biological catalysts. While the technology has not been used yet on a commercial scale, LS9 owns a demonstration facility in Florida.
“REG’s proven capabilities, track record for execution and access to lower-cost feedstock make it an ideal partner to commercialize LS9’s technology,” said Vinod Khosla, a founding partner of Khosla Ventures and an investor in LS9.
REG last month also announced it would acquire Syntroleum Corp., a developer of gas-to-liquids and renewable fuel technologies that owns a 50 percent interest in Dynamic Fuels LLC, the nation’s leading green diesel producer.