Verenium sells Oilseed Processing business to DSM for $37M

In California, Verenium Corporation has sold to DSM its Oilseed Processing business, including Purifine PLC, and licensed granted DSM exclusive licenses to its alpha-amylase and xylanase enzyme products for use in the food and beverage markets. The two companies also entered into a supply agreement for Verenium to manufacture the Purifine PLC, alpha-amylase and xylanase products for DSM, and agreed that Verenium will develop new gene libraries for use by DSM. The products acquired by DSM represented approximately $7.5 million in revenue to Verenium in 2011, and Verenium will receive $37 million in total consideration.

“We are pleased to have secured this capital without issuing new shares, and believe we have positioned ourselves to create value for shareholders. As a result of this transaction, we are able to retire our remaining debt and create a capital structure appropriate for our business,” said Jeff Black, Chief Financial Officer at Verenium. “We are now better positioned to invest in our current commercial products and pipeline and focus on driving long term value.”

The Digest’s Take: Given that Verenium had a market cap of around $40 million before the announcement, it must come as welcome news for shareholders that a line of business representing 12.2% of the company’s revenues is worth $37 million. Applying that 5X revenue model to the entire business would value the remainder of Verenium at $268.5 million, a huge premium over its post-deal market cap of $47.8 million. That’s overly simplistic, but emphasizes that the company may not, in fact, be well suited to the public markets, where investors are taking a far more dim view of the company’s value than DSM.