December 21, 2021 By Greenlane Renewables
Greenlane Renewables Inc. has entered into a definitive agreement to acquire Airdep S.R.L.(Airdep). Founded in 2011, Airdep is a provider of biogas desulfurization and air deodorization products based in Vicenza, Italy.
The acquisition of Airdep will bring in-house an effective and proven technology to remove hydrogen sulfide (H2S) from biogas for integration with Greenlane’s portfolio of biogas upgrading systems that produce low-carbon and carbon-negative renewable natural gas (RNG). It will also add an attractive line of products for sales into existing and new biogas projects globally, independent of the full biogas upgrading system. Over the last 10 years since its founding, Airdep has deployed over 100 H2S treatment systems that use a proprietary liquid reagent media for removal of H2S in biogas. The liquid media is regenerated and recirculated within the process to minimize operating costs. The Airdep system offers lower capital and operating costs than competing methods, and is especially compelling for use in higher flow, higher H2S concentration applications. Airdep has a history of generating profits with expected 2021 revenue of approximately $5M (unaudited). In addition to H2S treatment products, sales of which have generated the bulk of Airdep’s revenue, Airdep also offers an extensive line of air deodorization products.
“Every biogas to RNG project requires H2S treatment. The addition of Airdep’s proven technology to our industry-leading biogas upgrading solutions enables us to bring even more value to customers,” said Brad Douville, president and CEO of Greenlane. “Our search for the best commercially available H2S treatment technologies, particularly for higher flow, higher H2S concentration applications, led us to Airdep. We believe the price-performance of its products is compelling and will expand their use across a broader set of applications. Airdep has demonstrated success through strong revenue growth, but so far that growth has largely been in its Italian home market, which currently accounts for 90% of its revenue. We see a real, substantial and untapped opportunity to expand the geographic scope of sales of these products to the rest of Europe, to North and South America and to the rest of the world. The acquisition also gives us a solid footprint in Italy, one of the most dynamic RNG markets, creating new opportunities for sales of our biogas upgrading systems in the region.”
“We are excited to become a part of the Greenlane Renewables organization.” stated Andrea Valerio, founder and sole owner of Airdep. “Greenlane’s technical capability and global reach will together allow us to enhance and develop innovative new products for our existing customers and allow us to expand into global markets and serve new customers.”
Valerio will continue his leadership of Airdep as Managing Director upon the closing of the transaction. “Andrea Valerio has built an outstanding company that will enhance Greenlane’s global offerings. We welcome Mr. Valerio to the Greenlane family and we look forward to combining forces for future success,” said Douville.
Through the acquisition, Greenlane expects to further strengthen its price competitiveness and margins by insourcing a technology that it would otherwise procure to integrate into its biogas upgrading systems. In addition, Greenlane can expand its scope of supply and increase its revenue in projects where customers would otherwise purchase the H2S systems directly from others.
Consideration for the acquisition of Airdep S.R.L. will be comprised of $8M (€5.5M) in cash payable on closing and $1.4M (€1.0M) in Greenlane shares issuable in equal tranches over the following 4 quarters, with additional contingent earn-out consideration of up to $3.6M (€2.5M). The earn-out will be calculated, and if thresholds are met, become payable in early 2025 based on future company financial performance and will be payable in cash, or a combination of cash and Greenlane shares, at Greenlane’s option. The total maximum consideration for the acquisition is $13M (€9M).
Closing of the acquisition is anticipated in January, 2022 and is subject to customary closing conditions, including TSX approval in respect of the issuance of share consideration.
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