Sacramento-based Pacific Ethanol is buying Aventine Renewable Energy. When the deal closes, the acquisition would more than double Pacific Ethanol's annual production and make it the country's fifth-largest ethanol producer.
In a news release, Pacific Ethanol announced it will acquire all of Aventine's outstanding shares in a stock-for-stock merger transaction.
"With this transaction, Pacific Ethanol strengthens its unique production and marketing advantages by diversifying into two additional discrete markets and connecting its Western markets with Aventine's Midwest and Eastern markets for low-carbon renewable fuels," said Neil Koehler, CEO of Pacific Ethanol. "It will complement our existing business as we balance assets across new regional markets, expand our footprint for the production and marketing of low-carbon renewable fuels, diversify our technology and increase our mix of co-products."
Koehler said after the transaction is completed, Pacific Ethanol's annual ethanol production capacity will "more than double and establish Pacific Ethanol as the fifth largest producer and marketer of ethanol in the United States."
Aventine will be operated as Pacific Ethanol's wholly-owned subsidiary.
Ethanol producers, which have long operated on thin margins, are under pressure this year because of plummeting gas prices.
Prices must fall to remain competitive with other fuels, thinning margins even further.
(The Associated Press contributed to this story)