Key Takeaways:
- Gevo, Inc. sells its subsidiary Agri-Energy, LLC to A.E. Innovation for $7 million.
- A.E. Innovation plans to restart ethanol production and establish an innovation hub at the Luverne facility.
- Gevo retains key assets for future isobutanol production and biofuel development.
- The transaction is expected to save Gevo $3 million annually in idling costs.
- Completion of the deal anticipated by the end of 2025, pending customary conditions.
Gevo Sells Agri-Energy to Minnesota-Based A.E. Innovation
Gevo, Inc. (NASDAQ: GEVO) has entered into a definitive agreement to sell its wholly owned subsidiary Agri-Energy, LLC (“Agri”) to A.E. Innovation, LLC (“A.E.”) for a total consideration of $7 million. This transaction involves Agri’s ethanol-production facility in Luverne, Minnesota, which has an annual production capacity of 18 million gallons.
As part of the agreement, Gevo will retain certain key assets related to isobutanol production and a portion of undeveloped land at the Luverne site. With these retained assets, Gevo anticipates it could produce up to 1 million gallons per year of isobutanol, which can serve as a specialty chemical or be further processed into isooctane and jet fuel.
A.E. Innovation’s Vision for the Luverne Facility
The buyer, A.E. Innovation, is a Minnesota-based agriculture-oriented group that plans to reactivate ethanol production at the facility, which has been idle since 2022. Beyond ethanol production, A.E. intends to transform the site into an innovation hub, enabling other companies to scale emerging biofuel technologies.
Dave Kolsrud, principal of A.E. Innovation, highlighted the facility’s strategic potential, noting, “We’re seeing rapid innovation in the direction of bio-based fuels and chemicals, and Agri-Energy has the demonstrated history that it can work on the cutting edge.”
Kolsrud further emphasized Luverne’s unique advantages, including its history of agricultural innovation, access to low-carbon corn, renewable wind power, and a supportive local community.
Strategic and Economic Benefits for Gevo
Gevo CEO Patrick Gruber expressed enthusiasm for the future collaborations made possible by this transaction. “We see tremendous potential for future growth and new partnerships with A.E. Innovation,” Gruber stated. He also praised Minnesota’s farming communities for their sustainable agricultural practices, which he sees as foundational for innovations in biofuels and carbohydrate-based chemicals.
Financially, Gevo expects to receive an initial $2 million upon the transaction’s closing, with an additional $5 million structured as future cash payments. Additionally, Gevo estimates annual savings of approximately $3 million by eliminating the current idling costs associated with the facility. Moreover, Gevo foresees benefits from potential joint operations of isobutanol fermentation alongside ethanol production activities.
Positive Impacts for Luverne Community
The anticipated restart of ethanol production at Agri-Energy by A.E. Innovation is expected to provide significant benefits for the City of Luverne and its surrounding region. These include renewed support for local agriculture, strengthened economic conditions, and increased opportunities for local stakeholders.
Over recent years, the Luverne plant has also served as a demonstration site highlighting regenerative agriculture practices, biofuel production methods, and the versatility of corn-based products. Both Gevo and A.E. intend to expand upon these outreach and educational initiatives.
The transaction is slated to close by the end of 2025, contingent upon securing financing by A.E. Innovation and meeting customary closing conditions.
