Gevo Acquires Red Trail Energy for $210 Million, Advancing Net-Zero Aviation Fuel Goals

Gevo Inks $210M Deal For Ethanol And CCS Assets, Eyes Net-Zero Aviation Fuel Future - Gevo (NASDAQ:GEVO)

Gevo expects to retain all of the 50 full-time employees currently operating the assets being acquired. Gevo, Inc. GEVO shares are trading higher after it inked a deal to acquire the ethanol production plant and carbon capture and sequestration (CCS) assets of Red Trail Energy for $210 million. The acquisition encompasses CCS assets with a total sequestration capacity of 1 million metric tons per year, of which 160,000 metric tons are currently used. The site has the potential to support numerous future Net-Zero and related projects. The purchase includes ethanol and CCS assets. Gevo expects this acquisition to boost shareholder value by integrating carbon abatement with advanced liquid fuels and providing a Net-Zero site for sustainable aviation fuel production in the U.S. and Canada. Gevo CEO Patrick Gruber said, "This acquisition gives us the opportunity to build capability as a company and is a terrific training ground for our Net-Zero 1 project, as we inherit a trained cadre of employees who understand plant operations." "Carbon abatement for fuels and chemicals is core to our business. This acquisition enables immediate market development for sequestered carbon." Also Read: Gevo And Shell Team Up To Drive Green Revolution In Motorsports: Details Gevo expects to achieve positive Adjusted EBITDA in 2025 by combining earnings from Red Trail Energy's ethanol and CCS assets, its RNG business, and other ventures. The transaction is set to close by first-quarter of 2025, pending regulatory approvals, equity holder consent, and acquisition financing. Gevo President and COO Chris Ryan stated, "We believe this site is ideal for production of sustainable aviation fuel using Gevo's integrated alcohol-to-jet technology and defossilized energy, combined with CCS. The CCS well gives us optionality for our Net-Zero 1 carbon sequestration needs." "We plan to immediately begin optimizing the asset with partners through combined heat and power, which will further lower the carbon intensity and increase annual carbon sequestration. This not only decarbonizes the current ethanol production further, but also enables the site for net-zero SAF and chemical production." Gevo plans to finance the deal with a combination of asset level debt and cash from the balance sheet. It ended the second quarter with cash, cash equivalents and restricted cash of $315.3 million. Price Action: GEVO shares are up 28.1% at $0.95 at the last check Thursday. Photo via Shutterstock Read Next: Alibaba Launches Cainiao Next-Day Delivery In Europe, Plans Global E-Commerce Hubs Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Market News and Data brought to you by Benzinga APIs

Gevo acquires Red Trail Energy for $210 million By Investing.com

ENGLEWOOD, Colo. - Gevo , Inc. (NASDAQ: NASDAQ:GEVO), a renewable chemicals and advanced biofuels company, has announced the acquisition of Red Trail Energy's ethanol production and carbon capture assets for $210 million. The deal is expected to position Gevo for positive Adjusted EBITDA in 2025, leveraging synergies with existing projects and enhancing its net-zero hydrocarbon fuel strategy. The acquisition includes a 65 million gallon per year ethanol facility and a carbon capture and sequestration (CCS) site with a 1 million metric ton annual capacity. Currently, the CCS operations sequester 160,000 metric tons of carbon per year. Gevo plans to retain the approximately 50 full-time employees working at the acquired facilities. The transaction aligns with Gevo's focus on carbon abatement and expands its footprint for future sustainable aviation fuel (SAF) production. The integration of the Red Trail Energy assets is expected to strengthen Gevo's capabilities in feedstock procurement, plant operations, and carbon abatement. Gevo's CEO, Dr. Patrick Gruber, emphasized the acquisition's role in advancing the company towards self-sustainability and profitability. Red Trail Energy's CEO, Jodi Johnson, expressed confidence in Gevo's leadership and its vision for a sustainable future. The acquisition is set to close by the first quarter of 2025, subject to regulatory approvals and financing. Gevo anticipates funding the purchase through asset-level debt and cash from its balance sheet. This strategic move is part of Gevo's broader mission to transform renewable energy into sustainable fuels and chemicals with a net-zero carbon footprint. The company operates one of the largest dairy-based renewable natural gas facilities in the U.S. and is the first to run a production facility for specialty alcohol-to-jet fuels and chemicals. The information in this article is based on a press release statement from Gevo. In other recent news, Gevo, Inc. has made significant strides in its business operations. The company has successfully secured an additional 180-day compliance period from Nasdaq to meet the exchange's minimum bid price requirement. Additionally, Gevo has inked a deal with Shell (LON:SHEL) Global Solutions Deutschland GmbH to supply a sustainable fuel blendstock for motorsport use, a move that is expected to reduce carbon emissions in the racing industry. In terms of financial updates, Gevo reported progress in its Q2 2024 earnings call, emphasizing its NZ one project and RNG business. The company is targeting an annual production capacity of 500,000 million BTUs for its RNG business and is in the process of securing a Department of Energy loan guarantee of approximately $900 million. The industrial organic chemicals manufacturer has also revised its employment agreements with top executives. CEO Patrick Gruber will maintain his role with an annual base salary of $650,000 and is eligible for a target annual bonus of 100% of his base salary. President and COO Christopher Ryan's amended agreement includes a base salary of $431,600, with an 80% target bonus. Furthermore, Gevo has partnered with Google (NASDAQ:GOOGL) to integrate AI tools into its Verity platform. These recent developments underscore Gevo's commitment to its strategic projects and executive team. Gevo, Inc.'s recent acquisition of Red Trail Energy's ethanol production and carbon capture assets marks a significant step forward in their strategic expansion. With a focus on the financial health and market performance of the company, InvestingPro provides some key insights that are particularly relevant in the context of this acquisition. InvestingPro Tips highlight that Gevo holds more cash than debt on its balance sheet, which is a positive indicator of the company's financial stability and could be a contributing factor in its ability to fund the acquisition through cash reserves. Additionally, the fact that Gevo is trading at a low Price / Book multiple suggests that the company's market valuation may not fully reflect its asset value, potentially offering an attractive entry point for investors. From the real-time data provided by InvestingPro, we observe that Gevo has a market capitalization of $172.74 million, which reflects its size and market presence in the renewable energy sector. Despite a significant revenue growth of 98.34% in the last twelve months as of Q2 2024, the company has a negative Gross Profit Margin of -105.98%, indicating that it is currently not profitable. Moreover, the Price / Book ratio stands at 0.33, reinforcing the tip regarding its low valuation relative to its book value. While Gevo's stock price has seen a strong return over the last three months, with a 20.87% increase, the company does not pay a dividend to shareholders, which may be a consideration for those looking for income-generating investments. It is also worth noting that analysts do not anticipate the company will be profitable this year, aligning with the negative Gross Profit Margin observed. For readers interested in deeper analysis or seeking additional insights, there are 12 more InvestingPro Tips available for Gevo at https://www.investing.com/pro/GEVO. These tips could provide further context on the company's financial health and market performance, which are critical factors to consider in light of the recent acquisition news.