Tesoro Petroleum (TSO) Enters Agreement to Acquire Virent

September 6, 2016 4:32 PM EDT

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Tesoro Corporation (NYSE: TSO) has agreed to acquire Virent, Inc. ("Virent"), an innovative renewable fuels and chemicals company, to support Virent's success in bringing biofuels technology to commercial scale.

Tesoro's renewable fuels strategy is to foster the development of high-quality, lower-carbon, renewable feedstocks and blendstocks that can either be co-processed in existing refineries or blended seamlessly with traditional fuels. Tesoro believes it is important to commercialize new technologies that meet stakeholder expectations and regulatory requirements by producing renewable fuels that do not compromise product quality. By generating valuable credits, this approach may also lower Tesoro's compliance costs with the federal renewable fuel standard and California's low carbon fuel standard.

Virent's BioForming® technology can convert sugars and other biomass derived feedstocks into renewable gasoline blendstocks and aromatics, which are fully compatible with the nation's existing fuel infrastructure and current vehicle warranties. Virent's aromatics product can also be used for renewable chemicals, most notably para-xylene, a key component in polyester.

"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," says 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."

Tesoro will operate Virent as a wholly owned subsidiary which will be located in Madison, Wisconsin. Included in the acquisition are existing collaboration agreements, all licenses, a significant intellectual property portfolio and pilot and demonstration facilities. Tesoro plans to continue and cultivate Virent's existing business partnerships and relationships in order to support its mission. The transaction is expected to close by the end of September.

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