- Daily Zen
Danimer Scientific, a next generation plastic manufacturing company, has agreed to merge with Live Oak Acquisition Corp in a deal worth around $890 million.
Danimer Scientific is going public through the special purpose acquisition company or SPAC route where a shell company raises cash in an IPO to raise enough money to buy a company within two years and make it a public entity.
For the Bainbridge, Georgia-based Danimer, the SPAC way of going was more functional than the traditional IPO route said Chief Executive Stephen Croskrey.
“The SPAC route gives us the speed that we need to get to that capital. We just don’t have time to start a traditional IPO process right now,” Croskrey said in an interview.
Live Oak raised $200 million in May 2020 through an IPO on the New York Stock Exchange. Upon completion of the deal, Danimer’s stock will be publicly traded on the NYSE.
Institutional investors have committed to invest $210 million, including Apollo, Federated Hermes Kaufmann Small Cap Fund, and another $50 million from Live Oak affiliates.
The deal with Live Oak will give Danimer $385 million in cash, enabling it to expand capacity which had taken a hit due to the pandemic.
“We plan to use the proceeds to build out the plant in Kentucky and to build a greenfield facility,” said Croskrey, who will continue as CEO after the deal. Danimer has been “marginally profitable” for the last several years and expects earnings to be break-even or slightly positive, Croskrey said
Danimer will continue to be led by Stephen E. Croskrey, Danimer’s current Chief Executive Officer and other senior management team.
Danimer Scientific is focused on the development and production of biodegradable materials. The Company’s signature polymer, Nodax™ PHA (polyhydroxyalkanoate), is a 100% biodegradable, renewable, and sustainable plastic produced using canola oil as a primary feedstock. It is marine degradable, ensuring the material will fully degrade in ocean water without leaving behind harmful microplastics.
Danimer is currently producing and shipping NodaxTM at an industrial scale from its existing facility in Winchester, Kentucky. The company has partnered with key plastics manufacturers and consumer products companies such as PepsiCo, Nestlé, Genpak, WinCup, Columbia Packaging Group and Plastic Suppliers Inc.
Danimer is a leader in the rapidly expanding bioplastic industry, which currently is an estimated 1% of the global plastics market.
The global biopolymer market is seen exceeding $13 billion by 2021, according to data from Transparency Market Research.
Daminer has a vast portfolio of patents across the globe. With $890 in equity, $385 in cash and only $20 million of debt provides it ample opportunity to tap into growth opportunities.
“We are excited to partner with Live Oak and transition Danimer to be a public company,” said Stephen E. Croskrey, Chief Executive Officer of Danimer. “We are at an inflection point in our growth trajectory and this transaction will fuel the next phase of our rapid commercial expansion. Our research-based approach to creating environmentally responsible solutions has attracted a blue chip, multinational customer base and our partnership with Live Oak will allow us to further scale production to meet strong customer demand for our technology. We believe PHA has the ability to eliminate the pollution caused by single use plastics worldwide, a potentially remarkable achievement. We are well positioned to further expand our 100% biodegradable products to a wide range of plastic and specialty applications, with a long runway for profitable global growth.”
The Boards of Directors of Live Oak and Danimer have unanimously approved the transaction.