Novozymes and Beta Renewables form joint venture for biofuel projects

Danish industrial-enzymes maker Novozymes has agreed to enter into a €90 million (US$116 million) joint venture deal with Beta Renewables for biofuel projects. Novozymes will buy a 10% stake in Beta Renewables, and the deal will make Novozymes the preferred enzyme supplier for Beta Renewables plants, which are designed to produce cellulosic ethanol from wood, grasses and other inedible parts of food crops. Novozymes could earn as much as 1 billion crowns (US$173 million) in annual sales from the deal.
Beta Renewables is part of Italy’s Gruppo Mossi & Ghisolfi, which is planning to open the world’s first commercial-scale, non-food biofuels plant. Advanced non-food biofuels are a promising alternative to increasingly expensive food crops such as grains and sugar cane, which are used in the production of bio-ethanol, and are nearing price competitiveness with gasoline.
Under the deal, Novozymes will pay Beta Renewables about €90 million (US$114.5 million) in cash for the 10% stake, as well as marketing fees and other intellectual property rights and milestone payments. The agreement stipulates that Beta Renewables will be able to contract 15-25 new cellulosic biofuel facilities within the next three to five years. The transaction will have a negative effect on Novozymes’ cash flow of 670 million crowns (US$114.4 million) in the last quarter of this year. As a result, the company will have to terminate the 2 billion-crown (US$341.6 million) share buy-back program it announced in August last year. The company said the group’s free cash flow forecast before acquisitions would stay the same in 2012, with the guidance for return on invested capital changed from about 20% to about 19%. (October 29, 2012)