REG signs agreement to acquire Sanimax’s biodiesel plant

Biofuels producer Renewable Energy Group (REG) has signed an asset purchase agreement with US-based rendering firm Sanimax Energy to acquire Sanimax's 20m gallon nameplate capacity biodiesel refinery located in DeForest, Wisconsin.

Under the asset purchase agreement, REG will pay Sanimax around $11m in cash and will issue 500,000 shares of REG common stock in exchange for the biorefinery and related assets.

REG will also pay Sanimax up to an additional $5m in cash over a period of up to seven years after closing based on the volume of biodiesel produced at the plant, which will be re-named REG Madison.

Sanimax operates a grease processing facility at the same location, although that facility is not part of the acquisition. Closing of the transaction is subject to customary closing conditions, REG said in a statement.

"With growing biomass-based diesel volumes in the US, REG is continuing its growth as well," said Daniel Oh, REG President and CEO.

'Multi-feedstock biorefineries'
He added: "This plant will add to our network of lower-cost, lower-carbon intensity, multi-feedstock biorefineries. Having a dependable feedstock supplier co-located next door should provide an opportunity for additional cost savings and logistical advantages. We have done business with Sanimax and the Couture family for many years and look forward to a continuing prosperous relationship."

"This agreement is in line with our business plan to improve focus on our core businesses," said Martin Couture, Sanimax's President and CEO.

He explained: "We are pleased that our biodiesel employees will have an opportunity to pursue their career with an industry leader.

"This is a reflection of the excellent work they have achieved over the past several years. Sanimax looks forward to continuing its excellent business relationship with REG as a shareholder and a reliable feedstock supplier."

The biorefinery is located just north of Madison, Wisconsin and began production in 2007.

Using the same REG patented and proven high free fatty acid processing technology as the company's Seneca, IL plant, it produces biodiesel from lower cost feedstocks including yellow grease, rendered animal fats, and inedible corn oil in addition to refined vegetable oils. The facility has both truck and rail capabilities.

Upon closing of the transaction, REG will have 11 active North American biomass-based diesel refineries in seven states including: Iowa, Illinois, Texas, Louisiana, Minnesota, Washington and Wisconsin. According to REG, they will have a combined nameplate production capacity of 452m gallons.