BASF Acquires Enzyme Maker Verenium

BASF has agreed to buy enzyme maker Verenium for $62 million. The move adds an attractive product pipeline to BASF’s growing enzyme business while marking the end of the line for a once-high-flying player in the industrial enzyme field.

San Diego-based Verenium develops enzymes for industries such as animal nutrition, grain processing, and oil-field services. The firm has about 110 employees and posted sales last year of $57 million.

Verenium began life as Diversa, which sought microbes in extreme environments such as volcanoes and developed their enzymes for industrial uses. The company went public in 2000 and soared to a value of more than $5 billion. At its peak the firm had more than 350 employees. But investor interest in industrial biotechnology waned. By 2006, Diversa had shed employees and ended programs.

The following year, Diversa merged with the cellulosic ethanol developer Celunol to form Verenium. The firm reversed course in 2010, selling the ethanol business to BP and recasting itself as a specialty enzyme company. Last year, Verenium sold its business in oilseed-processing enzymes to DSM for $37 million.

For BASF, the purchase continues a buildup in enzymes. In May, it acquired Henkel’s detergent enzyme technology. It signed a licensing agreement with enzyme developer Dyadic International, and it expanded its collaboration with Direvo Industrial Biotechnology to develop enzymes for animal nutrition.

The acquisition strengthens BASF’s enzyme platform, according to Laurence Alexander, chemicals analyst at investment banking firm Jefferies. In a note to investors, Alexander pointed out that BASF will get a pipeline of products that have a $1.2 billion-per-year market opportunity.