LanzaTech gets lowball takeover offer

The ethanol technology firm LanzaTech has received a takeover offer of 2 cents per share from one of its investors, Carbon Direct Capital Management. Carbon Direct says the offer, which is at about a tenth of LanzaTech’s current stock price, may be the only thing that keeps LanzaTech from going bankrupt.

LanzaTech, based in Skokie, Illinois, has a fermentation technology that converts carbon monoxide emissions from sources like steel plants into ethanol. The company says its partners operate six commercial facilities worldwide using its technology and have the capacity to make 300,000 metric tons of ethanol per year.

LanzaTech went public in 2023 through a merger with a special purpose acquisition company (SPAC), raising $240 million. The company has an august lineup of backers, including the metal producer ArcelorMittal and the chemical giant BASF.

Last year, Carbon Direct purchased $40 million in LanzaTech promissory notes that can be converted into more than 18% of LanzaTech’s stock.

In a letter to LanzaTech, Carbon Direct points out that its offer reflects an enterprise value—equity plus debt and cash on LanzaTech’s balance sheet—of $100 million. “We are extremely concerned that the only alternative to this offer will be a bankruptcy process where 100% of stockholder value and a major portion of the creditors’ investments will be lost,” it says.

LanzaTech, which says it is reviewing the letter, has been struggling. During the first 9 months of last year, it generated a loss of $110.7 million on $37.6 million in sales. The company recently filed a notification of a delay in its 2024 annual report.

In January, LanzaTech said it would spin out its synthetic biology platform as a separate company. And in March, the company announced a $30 million cost-reduction program in which it will shed 10–15% of its workforce. CEO Jennifer Holmgren characterized the maneuver as an attempt to “right-size our cost structure” as LanzaTech transforms from an R&D firm into one that is deploying its technology.

Anthony DeOrsey, a research manager at the Cleantech Group, a consulting firm, says in an email to C&EN that using new technology to produce commodity products that are entrenched in the marketplace can pose unique challenges. “A company like LanzaTech—or anyone producing commodities—needs to hit pretty significant scale,” he says. Corn-based ethanol, one of the most heavily subsidized products in the US, he notes, is a particularly difficult business to crack.

DeOrsey observes that LanzaTech has been trying to mitigate these challenges by generating revenue from consulting, such as its biorefining services, and also by plunging into higher-value markets such as jet fuel.

But even noncommodity start-ups based on sustainable technology have been struggling lately. Danimer Scientific, which makes the biobased polymer polyhydroxyalkanoate and also went public through a SPAC, declared bankruptcy in March.