On Sept. 6, Tesoro Corp. announced an agreement under which it will acquire Virent Inc. and become the company’s new strategic owner. Virent said the acquisition will support the scale-up and commercialization of its BioForming technology for the production of low-carbon biofuels and chemicals.

Virent’s BioForming technology converts sugars and other biomass-derived feedstocks into renewable gasoline blendstocks and aromatics. In addition to transportation fuel, the aromatics can also be used for renewable chemicals, including paraxylene, which is a component of polyester.

Under the agreement, Virent will become a wholly owned subsidiary of Tesoro and remain in Madison, Wisconsin. Included in the acquisition are existing collaboration agreements, all licenses, a significant intellectual property portfolio and pilot and demonstration facilities. Tesoro said it plans to continue and cultivate Virent’s existing business partnerships and relationships in order to support its mission. The transaction is currently expected to close by the end of September.

According to Virent, the companies initiated a strategic relationship in January and have worked together to establish a forward plan to scale-up the technology and reduce deployment risks.

“The Tesoro announcement is a critical milestone for Virent to establish a pathway to commercialization with a recognized leader in refining, marketing and logistics. While we will maintain our entrepreneurial spirit and culture, Virent will also benefit from the strategic support and capability of Tesoro, capturing the best of both companies,” said Lee Edwards, CEO of Virent. “We are excited to start the next phase of work with Tesoro, along with our other strategic partners.”

In a statement, Tesoro noted its renewable fuels strategy is to foster the development of high-quality, lower-carbon, renewable feedstocks and blendstocks that can be either coprocessed in existing refineries or blended seamlessly with traditional fuels. Tesoro also indicated that its approach may also lower its compliance costs with the renewable fuel standard (RFS) and California Low Carbon Fuel Standard through the generation of compliance credits.

"With this acquisition, Tesoro intends to foster more rapid commercialization of Virent's renewables technology, which could uniquely position the company with an improved means of future regulatory compliance, as well as potential licensing opportunities," said CJ Warner, executive vice president of operations at Tesoro. "Tesoro plans to provide resources and expertise to support the scale-up and commercialization of the technology while maintaining Virent's innovative culture and business that are key to its success."