Diversa and Celunol Announce Merger to Create a New Biofuels Industry Leader

Combined company will enhance existing Diversa enzyme business with aggressive push into cellulosic ethanol plant development and production

14-Feb-2007

Diversa Corporation and Celunol Corp. announced they have signed a definitive merger agreement to create a new leader in the emerging cellulosic ethanol industry. The combined company shall be the first within the cellulosic ethanol industry to possess integrated end-to-end capabilities in pre-treatment, novel enzyme development, fermentation, engineering, and project development. It will seek to build a global enterprise as a leading producer of cellulosic ethanol and as a strategic partner in bio-refineries around the world. At the same time, the company will continue to pursue broad market opportunities for specialty industrial enzymes within the areas of alternative fuels, specialty industrial processes, and health and nutrition, with a primary focus on enzymes for the production of biofuels. The combined company will be headquartered in Cambridge, Massachusetts and have research and operations facilities in San Diego, California; Jennings, Louisiana; and Gainesville, Florida.

Celunol has recently commenced operations of the nation's first cellulosic ethanol pilot facility in Jennings, Louisiana and expects to complete a 1.4 million gallons-per-year, demonstration-scale facility to produce cellulosic ethanol from sugarcane bagasse and specially-bred energy cane by the end of 2007. In addition, Celunol's process technology has been licensed by Tokyo- based Marubeni Corp. and has been incorporated into BioEthanol Japan's 1.4 million liter-per-year cellulosic ethanol plant in Osaka, Japan. The combined company plans to bring its first U.S. commercial-scale cellulosic ethanol plants into production in late 2009.

Under the terms of the merger agreement, Diversa will issue 15,000,000 shares to acquire the outstanding equity of Celunol. In addition, Diversa will provide Celunol with up to $20 million in debt financing to fund its operations prior to the closing, which will be assumed by Diversa at the closing. On a pro-forma, fully diluted basis, Diversa stockholders will retain ownership of approximately 76 percent of the combined company, and Celunol stockholders and option holders will own approximately 24 percent. The merger agreement has been unanimously approved by each company's board of directors and is subject to approval by their respective stockholders, regulatory agencies, and the satisfaction of other customary closing conditions. The transaction is expected to be completed by the end of the second quarter of 2007.

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