Renewable Energy Group Inc. announced Feb. 3 that it has signed an asset purchase agreement with Sanimax Energy LLC to acquire Sanimax’s 20 MMgy nameplate capacity biodiesel refinery located in DeForest, Wisconsin.

Under the asset purchase agreement, REG will pay Sanimax approximately $11 million in cash and will issue 500,000 shares of REG common stock in exchange for the biorefinery and related assets. REG will also pay Sanimax up to an additional $5 million in cash over a period of up to seven years after closing based on the volume of biodiesel produced at the plant, which will be renamed REG Madison LLC. Sanimax operates a grease processing facility at the same location, although that facility is not part of the acquisition. Closing of the transaction is subject to customary closing conditions.

“With growing biomass-based diesel volumes in the U.S., REG is continuing its growth as well,” said Daniel J. Oh, REG president and CEO. “This plant will add to our network of lower-cost, lower-carbon intensity, multifeedstock biorefineries. Having a dependable feedstock supplier colocated next door should provide an opportunity for additional cost savings and logistical advantages. We have done business with Sanimax and the Couture family for many years and look forward to a continuing prosperous relationship.”

“This agreement is in line with our business plan to improve focus on our core businesses,” said Martin Couture, Sanimax’s president and CEO. “We are pleased that our biodiesel employees will have an opportunity to pursue their career with an industry leader. This is a reflection of the excellent work they have achieved over the past several years. Sanimax looks forward to continuing its excellent business relationship with REG as a shareholder and a reliable feedstock supplier.”

The biorefinery is located just north of Madison, Wisconsin, and began production in 2007. Using the same REG patented and proven high free fatty acid processing technology as the company’s Seneca, Illinois, plant, it produces biodiesel from lower-cost feedstocks including yellow grease, rendered animal fats, and inedible corn oil in addition to refined vegetable oils. The facility has both truck and rail capabilities.

Upon closing of the transaction, REG will have 11 active North American biomass-based diesel refineries in seven states [Iowa (3), Illinois (2), Texas (2), Louisiana, Minnesota, Washington and Wisconsin (1 each)] with a combined nameplate production capacity of 452 MMgy.