REG enters industrial biotech sector with acquisition

Renewable Energy Group has acquired renewable chemical technology developer LS9 for a purchase price of up to $61.5 million (€45 million), consisting of up front and earnout payments, in stock and cash.

Most of the LS9 team, including the entire research and development group, will join the newly named REG Life Sciences, which will operate out of LS9’s headquarters in California.

‘This acquisition is another step in realizing our strategy to expand into the production of renewable chemicals and other products,’ says Daniel  Oh, REG CEO. ‘LS9’s industrial biotechnology platform and patent portfolio will now be combined with our production and commercialisation capabilities to accelerate the commercial introduction of renewable chemicals.’

LS9’s proprietary technologies harness the efficiency of the fatty acid metabolic pathway of microorganisms and are expected to make a range of renewable chemicals for many different markets, including renewable fuels. Feedstocks used include conventional corn and cane sugars, low-cost crude glycerin from biodiesel production and cellulosic sugars.

Under the terms of the agreement, REG paid $15.3 million in cash and issued 2.2 million shares of REG common stock (valued at approximately $24.7 million) at closing. REG may also pay up to $21.5 million in cash and/or shares for achievement of certain milestones over the next five years.