The terms of the transaction call for Syntroleum to receive 3,796,000 shares of REG common stock, valued at up to $49 million, in exchange for substantially all the assets and liabilities of the company.
Syntroleum has pioneered Fischer-Tropsch gas-to-liquids and renewable diesel fuel technologies and has 101 patents issued or pending. The company also owns a 50 percent interest in Dynamic Fuels LLC, a 75 million-gallon renewable diesel production facility in Louisiana.
The acquisition would build Renewable Energy Group's operations, which currently include eight active biodiesel refineries in four states with a combined production capacity of 257 million gallons. REG distributes biodiesel through a national network of terminals.
"Combining Syntroleum's renewable and synthetic fuel technologies with REG's expertise in biodiesel production, sales, marketing and logistics should be a positive outcome for investors in both companies," said Daniel Oh, Renewable Energy Group's president and CEO, in a press release. "This will help us grow our advanced biofuel business, enhance our intellectual property portfolio, expand our geographic footprint and launch REG into new customer segments."
Syntroleum's ownership stake in Dynamic Fuels represents an attractive entry path for REG into renewable diesel, Oh said. "They have invested substantial resources in their Bio-Synfining technology, which enables the economical conversion of lipid-based biomass into diesel and jet fuel," he said. "Their technology and products complement our core biodiesel business."
Syntroleum's board of directors unanimously approved the asset purchase agreement, which is subject to a vote by the company's shareholders. The company's annual meeting is scheduled today at 2 p.m. and will be shown via live webcast.
The asset sale is expected to close in the first quarter of 2014.