Gevo, Inc. (GEVO) is on the move, surging higher in Thursday trading after announcing a strategic acquisition that positions the company for significant growth in the sustainable energy sector. Gevo has entered into an agreement to acquire Red Trail Energy’s ethanol production plant and associated carbon capture and sequestration (CCS) assets for a cool $210 million. This acquisition marks a major step forward for Gevo, expanding its platform for sustainable aviation fuel (SAF) production and other renewable energy projects.
The heart of the acquisition lies in Red Trail’s low-carbon ethanol production facility, boasting a capacity of 65 million gallons per year. This facility is coupled with impressive CCS assets capable of sequestering up to 1 million metric tons of carbon annually. Currently, the facility captures an impressive 160,000 metric tons of carbon per year, with significant potential for further expansion in the future. This acquisition is a strategic move for Gevo, bolstering its portfolio of renewable energy projects, particularly its Net-Zero 1 SAF project in South Dakota. By integrating Red Trail’s existing infrastructure, Gevo gains a wholly-owned carbon sequestration site and secures additional supplies of low-carbon ethanol, critical components for its SAF production ambitions.
Gevo anticipates a significant boost to its financial performance as a result of this acquisition. The company projects a positive Adjusted EBITDA by 2025, fueled by synergies between the Red Trail assets, Gevo’s renewable natural gas (RNG) business, and other ventures like its Verity carbon tracking subsidiary. Gevo’s management team is confident that this acquisition will be a key factor in achieving profitability even before the full commercial operations of the Net-Zero 1 project, expected to come online in 2025. CEO Dr. Patrick Gruber highlighted the strategic importance of the acquisition, emphasizing that it not only delivers immediate benefits but also mitigates risks related to carbon sequestration, laying a strong foundation for Gevo’s future growth. The deal also brings Red Trail Energy’s skilled workforce into the Gevo family, preserving valuable expertise in plant operations and sustainability practices.
The market responded enthusiastically to the news. Gevo shares soared by 30.7% to 96 cents per share according to Benzinga Pro, reflecting investor confidence in the company’s strategic direction and the potential of this acquisition. This move solidifies Gevo’s position as a leader in the sustainable aviation fuel and renewable energy sectors, setting the stage for significant growth and a brighter future for the company.
