Martek adds production capacity for growing fatty acid demand

- Last updated on GMT

Related tags: Martek, Docosahexaenoic acid

Martek Biosciences is to pay around $10 million for the assets of
contract fermentation business FermPro Manufacturing. The FermPro
facility will be used to produce extra quantities of its
microalgae-derived DHA and ARA fatty acids.

Martek Biosciences is to acquire part of the assets of contract manufacturing firm FermPro Manufacturing which will be used to produce extra quantities of DHA and ARA.

Martek will pay around $10 million for certain FermPro assets, made up of $5 million in cash and 124,788 shares of Martek's common stock - a discount of approximately 10 per cent to the current market price, the company said. A $10 million secured note will also be assumed as part of the transaction.

The deal will see Martek​ gradually replace the Kingstree, South Carolina facility's contract fermentation services with production of its microalgae-derived DHA and ARA. The fatty acids, now being sold to most of the leading infant formula makers, as well as other food and supplement manufacturers are also gaining interest through new research.

Martek is expecting an extensive expansion in DHA and ARA production, but also certain tax incentives from South Carolina state. The company also plans to expand DHA production in Winchester, KY, which would further increase its production capacity in 2004.

"Martek-Kingstree will be an important part of Martek's future. I believe the talent and experience of its workforce will greatly benefit Martek in pursuit of its goal to become a major biotechnology company,"​ said Henry Linsert, chief executive officer of Martek.

The FermPro facility currently generates revenues of approximately $20 million annually, on a site of over 500 acres with extensive fermentation, recovery, laboratory and warehousing capabilities. It has been producing DHA for Martek for the last year.

FermPro President and CEO Barney Easterling will become a Martek vice president. The deal, subject to the usual conditions, is expected to close in six to eight weeks.

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