Carbios acquires entire stake of Carbiolice for polymer biodegradation tech

News came from Carbios, the French biotech company pioneering new enzymatic solutions to reinvent the lifecycle of plastic and textile polymers, that they acquired shares of a joint venture, Carbiolice – which strengthens its capacity to develop its activities on polymers biodegradation beyond PLA (polylactic acid). You may recall that in May, Carbios raised about $138 million (€114 million) to support the construction of a first of a kind 100% PET recycling production unit using its enzymatic technology, which draws the departure from the current standard chemical recycling processes closer to a commercial reality.

In today’s Digest, details on the acquisition and what it means, Carbios’ work with tire giant Michelin as well as Novozymes, PepsiCo, Nestle, L’Oreal and others, exclusive Digest interview with Carbios Deputy CEO Martin Stephan, reactions from the stakeholders, and more.

PLA and PET

First, for reference, Carbios’ technology can recycle plastic (e.g. soda bottles, colored plastics, polyester) to produce consumer-grade, 100% recycled plastic (i.e. it can turn a bottle into a new t-shirt, and now a tire component tested and validated by Michelin). The company is partnering with brands such as PepsiCo, Nestle, Suntory Beverage & Food, L’Oreal, Michelin and the world’s largest enzyme producer, Novozymes, to scale up and produce PET-degrading enzymes. Carbios is working hand in hand with these giant multinational brands to implement its technology, and to lead the transition toward a truly circular economy.

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Carbios’ technology capability in tires — representing nearly 3 billion plastic bottles per year that could be recycled into technical fibres for use in Michelin’s tires alone — adds another layer to the company’s utility in a growing PET market of $70 billion USD, as well as a $40 billion waste stream following its breakthrough that enables polyester textile fibers to be “upcycled”.

The Acquisition

Now for the nitty gritty on the acquisition. Carbios acquired the SPI Fund’s entire stake in Carbiolice capital (37.29%). By holding 100% of Carbiolice’s capital, Carbios is strengthening its capacity to develop its activities on polymers biodegradation beyond PLA. The transaction values Carbiolice at approximately $58 million (€48 million).

Since the creation of Carbiolice in 2016, the close collaboration between Carbios and the SPI Fund enabled the industrial development of a unique innovative solution: The creation of a new generation of PLA-based plastics that are 100% compostable under universal conditions (industrial and domestic composting or methanization). This allows Carbios to address one of the key issues generated by the end-of-life of plastics: The pollution of our environment. The bioprocess developed by Carbios introduces enzymes at the heart of plastic products to make them 100% biodegradable. This technology, which was licensed to Carbiolice in 2016, leverages an enzyme-based additive known as Evanesto, which is easily incorporated into conventional plastic and packaging manufacturing processes.

This acquisition demonstrates Carbios’ confidence in Carbiolice’s development capability. It also reinforces Carbios’ ambition to position itself as the world leader in biological technologies to rethink the end of life of plastics and synthetic fibers.

Carbios’ option to purchase the shares held by the SPI Fund was exercisable between the third and sixth anniversary of the shareholders’ pact. As mentioned in its Universal Registration Document, Carbios could exercise this purchase option before the sixth anniversary of the Pact. Carbios therefore exercised this agreement and notified SPI of its willingness to exercise the purchase option for a sale price of €17.9 million under the terms of the shareholders’ pact. This acquisition comes as part of the rationalization of the Company’s portfolio with a view to developing its biodegradation technologies beyond PLA, as announced during the success of its capital increase on May 10, 2021.

The purchase of the SPI Fund’s shares follows the acquisition in October 2020 of Limagrain Ingredients’ entire stake in Carbiolice capital. Following this cash-paid acquisition, Carbios has a solid financial position with cash of about $138 million (€114 million), compared to about $35 million (€29 million) as of December 31, 2020.

What this means?

The Digest asked Carbios Deputy CEO Martin Stephan in an exclusive Digest interview, what does this acquisition mean for Carbios’ future, and he said, “This capital raise gives us the possibility to demonstrate that our technology is valid at industrial scale and will secure our licensing activities, paving the way to having several million tons licensed over the world in a near future.”

Yep, you read that right – “several million tons licensed over the world in a near future.”

As for the timeline, Stephan told The Digest, “By September 2021, our demonstration plant will start-up. By the end of 2022, we will start the construction of the reference unit. By the beginning of 2025, this reference unit will start-up.” That’s a pretty fast and furious timeline but it looks like they have all the pieces already falling into place.

In April, Carbios said they were continuing the current discussions with a significant PET producer for the purpose of selecting the most suitable site to build a first-of-a-kind 100% PET recycling industrial and commercial production unit after site selection is completed in 2022. Carbios’ first industrial Unit is expected to allow for an annual production of approximately 40,000 tons of recycled PET, with the first revenues to be generated in 2025.

Reactions from the stakeholders

“I want to express my gratitude to the SPI Fund for our productive collaboration. Their guidance and support have enabled the creation of one of the most innovative industrial biotech companies in Europe in the field of biodegradable plastic packaging,” said Jean-Claude Lumaret, Carbios’ Chief Executive Officer. “Carbios’ purchase of the Carbiolice shares held by the SPI Fund is consistent with our desire to strengthen value creation for our shareholders. We are convinced this operation will support Evanesto’s commercialization and extend the applicability of this technology to other polymers and products worldwide,” Mr. Lumaret added.

“As a founding member of Carbiolice, we are pleased to have supported it throughout its growth and to have played our role as a strategic partner in its governance alongside Carbios and Limagrain Ingrédients. From an industrial green chemistry start-up, Carbiolice has become a full-fledged technological SME in its market, offering innovative solutions with high environmental value,” said Jean-Philippe Richard, SPI Fund’s Investment Director.

“The industrial growth of Carbiolice reflects the advanced expertise of its teams and validates a technology that is unique in the world allowing the biodegradation and compostability of polymers. Carbiolice is a perfect illustration of the Bpifrance SPI Fund’s purpose: To develop industrial production sites in France with innovative partners and thus consolidate the French technological lead while anchoring in the regions highly skilled jobs,” Mr. Richard noted.

Bottom Line

Between their enzymatic recycling technology that deconstructs any type of PET plastic waste and their enzymatic biodegradation technology for PLA, Carbios is taking off like a rocket in 2021. This acquisition just further solidifies where they are going globally and towards commercialization for their tech that can really help get us to a truly circular economy. But the year is only about half over so we anticipate even more news from Carbios coming down the pike soon.

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