Upon closing of the transaction, the combined company will be called Danimer Scientific and is expected to remain listed on the NYSE under a new ticker symbol. Danimer will continue to be led by Stephen E. Croskrey, Danimer’s current CEO.
Danimer Scientific, which featured on a recent DairyReporter podcast, creates environmentally responsible and natural alternative solutions to traditional petroleum-based resins. The company’s signature polymer, Nodax PHA (polyhydroxyalkanoate), is a 100% biodegradable, renewable, and sustainable plastic produced using canola oil as a primary feedstock. Nodax PHA is the first PHA polymer to be certified as marine degradable, which verifies the material will fully degrade in ocean water without leaving behind harmful microplastics. As a result, Nodax eliminates the need for recycling and can replace the 80% of plastics that are never recycled or incinerated.
The company has partnered with plastics manufacturers and consumer products companies such as PepsiCo, Nestlé, Genpak, WinCup, Columbia Packaging Group and Plastic Suppliers Inc. as they transition a wide variety of plastic applications, including straws, food and beverage containers, flexible packaging, agricultural and medical applications, among others.
Based on signed and pending contracts, the company is fully sold out of all production in its Kentucky facility and will use the increased capital base to significantly increase production, to meet the current and long-term demand of its customer base.
The plan is to expand production capacity from the current 20m pounds annually to approximately 200m pounds in 2025.
“We are excited to partner with Live Oak and transition Danimer to be a public company,” said Stephen E. Croskrey, CEO 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 up 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.”
Rick Hendrix, CEO of Live Oak, said, “Danimer represents a unique and compelling investment opportunity with take-or-pay contracted revenue from a blue-chip client base for fully bio-degradable plastic resin that addresses one of the world’s most significant environmental challenges. 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. We believe Danimer is poised for rapid and sustained growth with a fully financed capacity expansion plan and proprietary customer applications.”
In addition to the gross amount of approximately $200m held in Live Oak’s trust account (assuming no redemptions are effected), institutional investors, including certain funds managed by affiliates of Apollo Global Management, Inc. and Federated Hermes Kaufmann Small Cap Fund, have committed to a private investment of $210m in Class A common stock of the combined company that will close concurrently with the business combination. Affiliates of Live Oak have committed to purchasing more than $50m of the private investment.
The transaction implies an equity valuation for Danimer of approximately $890m at closing. It is anticipated that the combined company will have approximately $385m of unrestricted cash on the balance sheet to fully fund future, planned growth, including the expansion of its current facility and the build out of its contemplated greenfield facility.
The boards of directors of Live Oak and Danimer have unanimously approved the transaction, and holders representing a majority of Danimer stock have signed voting and support agreements agreeing to vote for the transaction. The transaction will require the approval of the stockholders of both Live Oak and Danimer, and is subject to other customary closing conditions, including the receipt of certain regulatory approvals.
Danimer’s current senior management team will continue to lead the Company after the transaction closes. In addition to serving as CEO, Croskrey will be named chairman of the board at the company. Upon closing of the transaction, Rick Hendrix, CEO of Live Oak, will join Danimer’s Board, and John Amboian, non-executive chairman of Live Oak, will serve on the board as lead independent director.