Verenium sells cellulosic ethanol to BP

Another big news last week is the exit of Verenium from cellulosic ethanol as the company announced the sale of this business to BP.

Verenium said it will focus on the enzymes market instead. According to the company, cellulosic ethanol is still a big potential market but it needs large organizations with resources and capabilities such as its current partner BP to advance and build commercial plants.

BP is paying Verenium’s cellulosic business that include facilities in Jennings, LA and San Diego, CA, as well as associated technology platform and enzymes for $98.3m and $10.8m of currently restricted cash upon assignment of a lease to BP for $109m total.

Verenium will retain its commercial enzyme business, including its biofuels enzymes products and have the right to develop its own lignocellulosic enzyme program. Verenium will also retain select R&D capabilities, as well as rights to access select biofuels technology developed by BP using the technology it is acquiring from Verenium.

BP will become the sole investor in Vercipia Biofuels and Galaxy Biofuels, both 50-50 joint ventures of BP and Verenium. The deal is expected to close in the third quarter of 2010.

“The cellulosic ethanol market is evolving more slowly than one would have hope but we are now in a more advantageous position from an enzyme perspective,” said Carlos A. Riva, President and CEO at Verenium.

The sale of the biofuels business has helped to allay near-term liquidity concerns on Verenium, according to an analyst report from Jefferies & Company.

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