- Danimer Scientific has entered into a definitive merger agreement with Live Oak Acquisition Corp. (NYSE: LOAK)
- Pioneer in creating fully biodegradable and compostable bioplastics providing a cleaner, healthier, and environmentally responsible alternative to fossil fuel-based plastics
- High-growth industry leader with blue chip customer contracts demonstrating large-scale demand for PHA-based biodegradable plastics
- Institutional investors commit to invest $210 million at closing; including certain funds managed by affiliates of Apollo, Federated Hermes Kaufmann Small Cap Fund, and over $50 million from Live Oak affiliates
Danimer Scientific (“Danimer” or “the Company”), a next generation bioplastics company focused on the development and production of biodegradable materials, and Live Oak Acquisition Corp. (NYSE: LOAK) (“Live Oak”), a publicly-traded special purpose acquisition company, announced today a definitive agreement for a business combination that would result in Danimer Scientific becoming a public company. Upon closing of the transaction, the combined company will be renamed 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 Chief Executive Officer.
Danimer Scientific is a pioneer in creating 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, the highest standard of biodegradability, which verifies the material will fully degrade in ocean water without leaving behind harmful microplastics. As a result, NodaxTM offers a better beginning-of-life and end-of-life cycle than any of today’s traditional plastics, eliminates the need for recycling and can replace the 80% of plastics that are never recycled or incinerated.
Danimer is currently producing and shipping NodaxTM at an industrial scale level 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. 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 their increased capital base to significantly increase production, to meet the current and long-term demand of its customer base.
Danimer Investment Highlights:
- Leader in the rapidly expanding bioplastic industry, which currently represents less than an estimated 1% of the global plastics market
- Fully financed at closing of the merger to expand production capacity from 20 million pounds annually today to approximately 200 million pounds in 2025
- Intense demand from existing blue chip multinational customers supports management revenue forecast of over $500 million annually in 2025, with significantly increased profit margins by scaling existing production facilities
- Ownership of a portfolio of core patents purchased from Procter & Gamble in 2007, expanded to include numerous application-based patents, and now aggregating to more than 150 patents applicable in 20 countries
- $890 million of equity, $385 million of cash and only $20 million of pro forma debt provide ample flexibility to support abundant long-term growth opportunities, including further capacity additions domestically and internationally, as well as strategic partnerships and acquisitions of complementary technologies
- Highly experienced leadership team with long term tenure at the company and a board of directors with a proven record of creating shareholder value
“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.”
Rick Hendrix, Chief Executive Officer of Live Oak, commented: “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 $200 million 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. (NYSE:APO) (together with its consolidated subsidiaries, “Apollo”) and Federated Hermes Kaufmann Small Cap Fund, have committed to a private investment of $210 million 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 over $50 million of the private investment.
The transaction implies an equity valuation for Danimer of approximately $890 million at closing. It is anticipated that the combined company will have approximately $385 million 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 Chief Executive Officer, Mr. Croskrey will be named Chairman of the Board. Upon closing of the transaction, Rick Hendrix, Chief Executive Officer 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.
Additional information about the proposed transaction, including a copy of the merger agreement and investor presentation, will be provided in a Current Report on Form 8-K to be filed by Live Oak with the Securities and Exchange Commission and will be available at www.sec.gov.
Jefferies is serving as exclusive financial advisor, sole private placement agent and capital markets advisor to Live Oak. Morgan Stanley is serving as capital markets advisor to Live Oak. Houlihan Lokey is serving as financial advisor to Danimer. Mayer Brown LLP is serving as legal advisor to Live Oak. Kane Kessler, PC is serving as legal counsel to Danimer.
Investor Conference Call Information
Live Oak and Danimer will host a joint investor conference call to discuss the proposed transaction on Monday, October 5, 2020 at 9:00 am Eastern time.
Interested parties may listen to the prepared remarks call via telephone by dialing 1-877-407-9208, or for international callers, 1-201-493-6784. For those who are unable to listen to the live call, a replay will be available on the Live Oak website after the call at https://www.liveoakacq.com/.
The live conference call webcast, a related investor presentation with more detailed information regarding the proposed transaction and a transcript of the investor call will also be available at https://www.liveoakacq.com/. The investor presentation will also be furnished today to the SEC, which can be viewed at the SEC’s website at www.sec.gov.