POET eyes ethanol acquisitions, industry consolidation as plant prices hit historic lows

In South Dakota, the CEO of Poet revealed to the Associated Press that the company is in talks with “a number of ethanol companies“. Poet is the first company to confirm that it is actively seeking consolidation opportunities in a market where the acquisition cost of existing public biofuels companies is significantly below the construction cost of new capacity.

New capacity generally costs between $1.00 and $2.00 per gallon of installed capacity for first generation corn ethanol; Aventine Renewable Energy (AVR) shares are trading for around 12 cents per gallon of annual production. while Pacific Ethanol (PEIX) shares are trading for less than 30 cents per gallons of installed capacity.  “I think, quite honestly, some of the plants out there may be stranded capital,” Broin said. “They were built in the wrong locations. But there are some that we have significant interest in.”

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