US ethanol industry to see more consolidation

18 June 2008 19:25  [Source: ICIS news]

NASHVILLE, Tennessee (ICIS news)--The US ethanol industry will see more consolidation in the coming years due to the impact oversupply and rising production costs is having on ethanol margins, a consultant said on Wednesday.

Mergers and acquisitions in the US ethanol sector have doubled since 2007 compared with 2001 and 2006, said Ascendant Partners manager Kirk Martin during an industry event in Nashville, TN.

Martin said Ascendant has tracked 12 mergers and acquisitions in 2007-2008, totaling $2.5bn (€1.6bn). That figure compares with three deals in 2001-2003, worth a combined $570m, and another three transactions in 2004-2006 that totaled $220m.

Most deals were driven by capacity expansion, market entry and vertical integration, the consultant said, adding, however, that 75-80% of the operations failed to fully deliver the intended results.

Martin attributed that to lack of strategic clarity, inadequate planning and execution, all of which are controllable issues, he said.

Martin spoke at the 2008 Fuel Ethanol Workshop & Expo.

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By: William Lemos
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