Mascoma acquires Celsys BioFuels on undisclosed terms as cellulosic ethanol consolidation begins

In Massachusetts, cellulosic ethanol developer Mascoma acquired Celsys BioFuels, a cellulosic ethanol production technology company founded by a Purdue University team last year. The founder of Celsys will become the CTO of Mascoma. The price of the acquisition was not disclosed. Dartmouth professors Lee Lynd and Charles Wyman founded Mascoma in 2005 and raised $34 million from General Catalyst Partners and Atlas Ventures.

In conventional ethanol, ALL Fuels has commenced a consolidation effort with two acquisitions underway, and three other consolidations have recently been successful. Atlantic Ethanol, Mid-Atlantic Ethanol, Florida Ethanol, and Palmetto Agri-Fuels, announced a merger to form East Coast Ethanol. In Iowa, Unity Ethanol and Cedar River Ethanol, and Great Lakes and Green Plains, announced mergers in the past 90 days.

Last month, venture capitalist Sano Shimoda of BioScience Securities said that he foresaw a shakeout in the ethanol industry, and more consolidation as single plants are either consolidated, fail, or emerge as low-cost producers. He said that the ethanol industry had to urgently reduce costs to be able to survive without subsidies, suggesting that ethanol plants should be prepared to be viable even if the price of oil were to drop to $25-$30 per barrel.

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