Limited Biofuels M&A Activity in 2019, Stage Set for Potentially Busy 2020

Biodiesel M&A

Following a banner M&A year for biodiesel in 2018, biodiesel M&A in 2019 was limited to idled, non-operating, or sub-scale plants. Both the number of plants and the cumulative production capacity that changed hands were near five-year lows. Of the four transactions during the year, three were for non-operating plants. The only other acquisition was for a sub-10 MGPY operating plant.

The four transactions encompassed four plants with 99 MGPY of capacity as follows:

• World Energy acquired an idled plant in Estill, South Carolina. World Energy acquired the non-operating 40 MGPY facility. Terms were not disclosed.
• VERBIO acquired a non-operating plant from Atlantic Biodiesel in Welland, Ontario, Canada. The Germany-based biofuels producer acquired Atlantic Biodiesel, the second-largest biodiesel plant in Canada at 45 MGPY. Terms were not disclosed.
• Delek acquired a non-operating plant from JNS Biofuels in New Albany, Mississippi.  Delek added to its fleet by buying this 7.5 MGPY plant, Delek’s third biodiesel plant. Terms were not disclosed.
• Renewable Fuels by Peterson acquired one operating plant from White Mountain Biodiesel in Haverhill, New Hampshire.  Renewable Fuels by Peterson purchased this 6.5 MGPY plant. Terms were not disclosed.

US biodiesel producers faced a challenging environment in 2019 – no collection of the 2018 BTC proceeds, no clarity for the BTC credit and the encroaching competition from renewable diesel.   

Similarly to ethanol producers, several biodiesel companies cut production due to low margins. Some of the more notable companies idling or shutting down included the following:

• World Energy’s plants in Harrisburg, Pennsylvania; Natchez, Mississippi and Rome, Georgia, totalling 135 MGPY.
• Flint Hills’ 50 MGPY plant in Beatrice, Nebraska.
• Kolmar scaled back production by half at its 40 MGPY plant in New Haven, Connecticut.
• W2 Fuel’s plants in Crawfordsville, Iowa and Adrian, Michigan totalling 20 MGPY.
• REG’s 15 MGPY plant in New Boston, Texas.
• Chesapeake Green Fuels’ 10 MGPY plant in Clayton, Delaware.
• Integrity Biofuels’ 5 MGPY plant in Morristown, Indiana.

This operating environment created doubt for the potential buyers of biodiesel plants. 

Now let’s take a look at Advanced Biofuels.