Glob Bioenergies' (PA:ALGBE) acquisition of Syngip in an all-share deal further strengthens the company’s third-generation processes and as such is very synergistic. Our valuation range is now €34-51 per share (from €37-56) due to the higher share count.
Synergistic acquisition of international start-up
GBE has acquired Syngip, a Dutch start-up that is developing a process based on microorganisms to produce light olefins. The company uses industrial waste emissions in order to convert carbon monoxide (CO) and carbon dioxide (CO2) through metabolisation. GBE will incorporate metabolic pathways in order to produce isobutene as a first output product, thus the process is in direct synergy with GBE’s product. In terms of both the product and the expansion of technology, Syngip fits very well into GBE’s strategy to expand into third-generation processes.
We understand that Syngip will continue to focus on further developing third-generation processes. This is important to broaden feedstock sources, and because they enable GBE to reduce its cost base and its dependency on the commodity spread between oil and sugar prices. Syngip’s process is expected to be competitive with the conventional olefins production process at an oil price of US$45/bbl. Taking into account renewable fuel incentives, the break-even oil price will be still lower. It is also noteworthy that the Syngip process contributes to GHG emission savings, which positions GBE as a solution for industrial companies looking to comply with increasingly tight emissions regulations. We also note that this acquisition further widens the international reach of the company.
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