KTG Energie leaped to top position among German biogas groups
with the takeover of peer Deutsche Biogas in what could herald a wave of deals
in the sector in the face of elevated corn prices.
The group, spun off from farm operator KTG Agrar in June,
took to 50 megawatts its power output by buying for cash control of Deutsche
Biogas from majority shareholder, and chief executive, Horst Lammers.
And KTG Energie will boast some 60 megwatts in electricity
generation capacity by year end, a figure that chief executive Thomas Berger
said was "enough to supply more than half a million people with clean energy".
"Moreover, we will talk our sales revenues and earnings to a
whole new level," Dr Berger said.
Deutsche Biogas achieved sales of E32.3m in the year to
March, and an operating profit of E5.7m.
However, the group's shares have fallen from a high of E6.20
in December to a low of E2.79 last week amid questions over financing for
expansion plans, and over the high corn prices which have caught out many
biogas groups, which often rely largely on the crop as a major feedstock.
Biogas plants create energy by breaking down crops, or waste
products such as poultry muck or even abattoir waste, into gases which are burnt
off to create electricity.
KTG Energie is believed to have paid a below-market price
for its shares, and a total outlay of less than E10m, in the reverse of normal
takeover deals, when the acquirer pays a premium.
And the deal looks likely part of a longer-running trend,
with high corn prices appearing to be fuelling "industry consolidation", a
company source told Agrimoney.com.
"A number of operators are having problems," the source
said, with KTG Energie getting "offers often to buy new plants".
These would only be considered for purchase if deemed
suitable on criteria including price and geography, being near the group's
Raw material supplies
KTG Energie is being protected from the downturn by its close
ties with KTG Agrar, still its majority shareholder, and a reliance for
feedstock on second crops such as millet and Sudan grass which have seen far
more limited price rises than corn.
Furthermore, KTG Energie is boosting its own financial
firepower through a bond placement, which closes on September 27, aimed at
The group's shares closed 0.7% higher at E14.60 in Frankfurt.
Deutsche Biogas shares closed down 2.2% at E3.00.