Novozymes and Beta Renewables, a global leader in cellulosic biofuels and part of Gruppo Mossi & Ghisolfi, today announce an agreement to jointly market, demonstrate and guarantee cellulosic biofuel solutions. As part of the agreement, Novozymes will acquire a 10% share in Beta Renewables, paying approximately EUR 90 million cash for the equity, marketing fees, other intellectual property rights and milestone payments. As preferred enzyme supplier, Novozymes will gain access to significant new business opportunities. Novozymes expects Beta Renewables to be able to contract 15-25 new cellulosic biofuel facilities in the next three to five years. The annual sales potential for Novozymes from these plants could be up to DKK 1 billion.
The transaction is subject to customary closing conditions and is expected to be closed by the end of November 2012.
The partners will offer customers looking to produce biofuels from agricultural residues, energy crops and other cellulosic feedstocks a combination of Novozymes’ Cellic® enzymes and Beta Renewables’ PROESA™ engineering and production technology. Beta Renewables will embed Novozymes’ enzymes in the PROESA technology and guarantee biofuel production costs upon start-up of customers’ cellulosic facilities. The deal is unique in offering a combined solution that reduces the risk in customers’ projects while providing competitive commercial terms.
All of Novozymes’ existing partnerships within cellulosic biofuels will be respected and continued.
Beta Renewables and its parent company Gruppo Mossi & Ghisolfi have a strong track record in the advanced biofuel industry. Later this year Beta Renewables will open the world’s largest cellulosic ethanol plant in Crescentino, Italy. The plant will initially produce 13 million gallons (50 million liters) of ethanol per year from wheat straw, energy crops and other locally available feedstocks. It has a design capacity of 20 million gallons (76 million liters) per year. Beta Renewables has also secured a deal to license its PROESA technology to at least one manufacturing plant in Brazil with GraalBio, and the M&G Group recently received a $99 million loan guarantee from the U.S. Department of Agriculture to construct Project Alpha, a cellulosic biofuel plant in North Carolina.
Today, October 29, 2012, Novozymes will host a conference call for investors, analysts and media at
This transaction will have a negative impact on Novozymes’ cash flow of approximately DKK 670 million (EUR 90 million) in Q4 2012. The guidance on free cash flow before acquisitions will remain unchanged for 2012. The guidance on ROIC for 2012 is changed from ~20% to ~19% as a result of the additional capital invested. Novozymes’ long-term financial ambitions of EBIT margin of more than 20% and ROIC of more than 22% are not affected by this agreement. When there is more visibility on the long-term demand for enzymes, both in terms of volume and geography, new guidance for capital expenditure will be given accordingly.
Adjustment to the economic profit target
As announced on March 2, 2011, the share-based incentive program for Executive Management will be adjusted in the light of acquisitions. This acquisition of the share in Beta Renewables triggers a recalculation of the economic profit target to be achieved. Subject to final recalculations at the end of 2012 and 2013, the best current estimate is a reduction of DKK 85 million in the economic profit target.
About Beta Renewables
Beta Renewables is the leader in making non-food cellulosic biomass practical and cost-competitive for the production of advanced biofuels and biochemicals. Beta Renewables is a unique $350 million (€250 million) joint venture formed from the Chemtex engineering division of Gruppo Mossi & Ghisolfi, and TPG. The M&G Group is one of the world’s leading producers of PET resin and is Italy’s second largest chemical company. The Group has operations in Brazil, Mexico, China, India, the USA and Italy. The company has over 60 years of success in process development and commercializing hundreds of plants worldwide. Beta Renewables has invested over $200 million (€140 million) in the development of the PROESA™ process. The company is currently building the world’s first commercial-scale cellulosic ethanol facility in Crescentino, Italy, expected to start operations by the end of 2012.