PHA producer Danimer Scientific Inc. has entered into a definitive agreement to acquire Novomer Inc., a biotechnology company with proprietary technology to produce biodegradable and compostable plastic biopolymers, in a cash transaction valued at $152 million.
The transaction has been approved by the board of directors of both companies and is expected to close in the third quarter of 2021, subject to regulatory approvals and other customary closing conditions.
The technology developed by Rochester, N.Y.-headquartered Novomer, called CoEth, is based on its Novo22 advanced catalyst technology, which uses ethylene oxide and carbon monoxide to produce lactones. The company operates a pilot plant, also in Rochester, which it uses to develop new, carbon-efficient, cost-effective polymers and chemicals. The process is feedstock agnostic, meaning it can use either waste CO2 or 100 percent renewable sources to create the biopolymers.
Novomer also has an extensive intellectual property portfolio with more than 100 issued patents and 140 patents pending. Novomer has approximately 20 employees.
While Danimer Scientific also produces PHA, its product, known as Nodax, has properties and attributes that are different from those of Novomer's material. Nodax has strong performance and biodegradability properties, making it possible to be used across diverse end-use applications.
The two operations are highly complementary, Danimer officials said in a news release, adding that one aim will be to incorporate Novomer's p(3HP) as a component in certain Danimer resins. This will allow Danimer to reduce the amount of fermentation required in the production of its resins and consequently achieve a lower cost of production. In the light of this latest development, Danimer will likely modify its greenfield construction plans for its new facility in Bainbridge, Ga., to include fewer fermenters and expand Novomer's production capacity.
"We will now have the potential to provide an even broader range of products with improved barrier properties for packaging and other uses at a lower cost — all while using less energy and delivering biodegradability," Danimer CEO Stephen Croskrey said. "Further, we expect that Novomer's simplified manufacturing and operational processes will accelerate our ability to scale our production capabilities and to do so at a much lower average capital expenditure per pound than we had previously forecast."
Next to reducing capital expenditures on a per-pound basis, the transaction will enable Danimer to reach higher production volumes faster, especially once its Kentucky Phase II expansion is completed.
Phillip Van Trump, Danimer chief science and technology officer, said that Danimer had validated the biodegradability of Novomer's biopolymers through rigorous assessment and third-party testing.
"We believe that by incorporating Novomer's technology in our processes, we can further enhance production to meet our customers' commercial needs with a broader suite of biodegradable solutions," he said. "In addition to using Novomer's p(3HP) as an input in, and in conjunction with, the production of Nodax-based resins, this technology can also be used to produce acrylic acid from renewable and other sources for use across superabsorbent polymer products like diapers and feminine hygiene products."
Novomer CEO Jeff Uhrig will report to Croskrey and will continue to lead the Novomer team in coordination with Danimer's senior leadership.