Bioplastics firm Danimer merging with publicly traded Live Oak
In a big sign of the growth of sustainable plastics, bioplastics maker Danimer Scientific will become a publicly traded firm through a merger with Live Oak Acquisition Corp.
Officials with Bainbridge, Ga.-based Danimer and Live Oak of Great Falls, Va., announced the deal in an Oct. 5 news release. Live Oak was formed in May as an acquisition vehicle.
The combined firm will operate as Danimer Scientific and will be listed on the New York Stock Exchange by late 2020 or early 2021. Danimer will continue to be led by CEO Stephen Croskrey.
Danimer produces polyhydroxyalkanoate (PHA) resins under the Nodax trade name in Winchester, Ky. The firm also operates a pilot plant in Bainbridge. Officials said that Nodax PHA is a 100 percent biodegradable, renewable, and sustainable plastic produced using canola oil as a primary feedstock.
In an Oct. 5 phone interview with Plastics News, Croskrey said that the Live Oak merger "takes all the capital market risk out of our expansion plan."
Danimer now operates about 20 million pounds of annual PHA capacity in Winchester, with plans to increase that amount to 65 million pounds by the end of next year. An additional greenfield site in Winchester or another location would add another 125 million pounds of capacity. Croskrey said Danimer could break ground on that project in late 2021 or early 2022.
Danimer has been in the bioplastics market since 2007, but increased interest in sustainability has allowed the firm to land such customers as PepsiCo, Nestle, Genpak and WinCup in recent years.
"Our big challenge is how quickly we can put capacity on," Croskrey said. "Right now, we can sell everything we can make. And our current contracts could fill out [new capacity] pretty handily."
The Live Oak deal includes $890 million in equity and $385 million in cash. A group of investors including private equity giant Apollo Global Management is investing $210 million in the new firm.
Danimer now employs 165 and has annual sales of about $50 million. Sales are expected to surge to $500 million by 2025. Croskrey said that Live Oak looked at 40-50 investment opportunities before choosing to merge with Danimer.
"We believe Danimer is poised for rapid and sustained growth with a fully financed capacity expansion plan and proprietary customer applications," Live Oak CEO Rick Hendrix said in a news release.
He added that PHA adoption "is benefiting from powerful tailwinds as the result of wide-spread corporate commitments and evolving consumer preferences for eco-friendly packaging solutions that address the worldwide problem of plastic waste."
Danimer officials added that Nodax is the first PHA polymer to be certified as marine degradable, which certifies that the material will fully degrade in ocean water without leaving behind harmful microplastics.
Nodax "offers a better beginning-of-life and end-of-life cycle than any of today's traditional plastics," officials said. The material also "eliminates the need for recycling and can replace the 80 percent of plastics that are never recycled or incinerated," they added.
Croskrey said Oct. 5 that the marine certification means that Nodax "can get into a lot of end-of-life applications that you can't do with a lot of other biopolymers."
He added that customers are looking to bioplastics because many conventional plastics can't be recycled efficiently. "We like recycling, but recycling is more of a Band Aid, while bioplastics are a solution," he said.
Customers are using Danimer's PHA in a variety of applications, including straws, food and beverage containers, flexible packaging and agricultural and medical applications.
Danimer's current owners are local investors, mainly in Georgia. That group now will own just under half of the firm's shares. "These are people who believed in this company and stayed with us," Croskrey said.
Danimer formed in 2004 to develop compostable and biodegradable plastic alternatives. In 2007, the firm acquired PHA patents and technology from Procter & Gamble Co.