Company initiatives, Investments

BASF to acquire enzymes biz Verenium

Traditional chemical firms are more and more looking into biotechnology to expand their products and feedstock portfolio. There was the acquisition of Danisco by DuPont in 2011, DSM’s acquisition of Martek in late 2010, Lanxess investing in evocatal GmbH last June, and BASF acquiring Henkel’s detergent enzymes technology.

BASF announced last Friday that it is planning to acquire California, US-based enzymes firm Verenium for $62m (EUR48m) in cash. The acquisition is expected to close in the fourth quarter of 2013.

Holders of outstanding shares of Verenium’s common stock will receive $4/share, representing a 56% premium to the volume weighted average closing price of Verenium’s stock 6 months before the announcement of the transaction.

BASF itself already has an enzymes business of its own aside from the detergent enzymes acquisition in May. It was estimated that industrial biotechnology accounts for 10% of BASF’s portfolio split evenly between agricultural and renewable chemicals applications. Verenium meanwhile has focused on commercializing industrial enzymes after divesting its cellulosic ethanol business to BP for $100m in 2010.

Verenium has about nine enzymes commercialized and 12 in commercialization pipeline. Enzymes are proteins that act as catalysts, enabling or accelerating biological and chemical processes. They are used in the development of sustainable solutions in a variety of applications, e.g. detergents, human and animal nutrition.

According to a report from US investment firm Jefferies & Company, the global enzymes market is a profitable $3bn-3.5bn industry with annual average growth of 6%-7%. The detergent enzymes market was worth $750m worldwide last year. Technical enzymes include textile applications ($270m), personal care ($150m), leather processing ($85m), pulp/paper processing ($40m), and other industrial applications ($150m). Other end markets include food and animal feed.

Novozymes accounted for 47% of the global enzymes market followed by DuPont/Danisco (21%), DSM (6%), BASF (4%), Associated British Foods (4%), captive production (10%) and others (9%).

In the industrial biotechnology sector, enzymes are particularly important in converting starches into glucose. Ethanol companies have also relied on R&D by enzyme companies such as Novozymes, Verenium and DuPont to make corn-based ethanol competitive with other feedstocks.

In the household cleaning and detergents market, consumer product companies such as Procter & Gamble, Ecolab, Unilever, Henkel, etc., have been using enzymes for their detergents and cleaning products formulations.

About Doris de Guzman

Will Green Chemistry save the world or is it hype? Doris de Guzman examines alternative processing, new technology, R&D and other sustainability initiatives aimed at preventing pollution; replacing ingredients; and using renewable feedstocks in Green Chemistry. She has been covering the oleochemicals market for 15 years and spread her beat to inorganics, biofuels and green chemistry.

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