Biodiesel giant expands to new markets

Source: Amanda Peterka, E&E reporter • Posted: Friday, January 24, 2014

The nation’s largest biodiesel maker is jumping into the renewable chemical business.

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.