Italy-based GFBiochemicals buys assets of Segetis

An Italian green chemistry company that already has achieved commercial-scale technology has acquired the assets, including several dozen patents, of Golden Valley-based Segetis, which was unable to consummate plans last year to build a commercial plant in northeastern Minnesota.

GFBiochemicals, which says it is the largest producer of chemical building blocks made from nonpetroleum sources, said the acquisition of Segetis will get it into commercial production in the United States. Terms were not disclosed.

"With the acquisition of the Segetis assets and intellectual property … we can accelerate market entry for 'levulinic acid' and its derivatives," GF Biochemicals Chief Commercial Officer Marcel van Berkel said in a statement. "This acquisition marks an important transformational moment for GFBiochemicals and the beginning of a growth strategy."

Segetis, established more than a decade ago, attracted at least $60 million in venture capital. It operated a laboratory and a pilot plant that was producing nonpetroleum-based solvents for several detergent companies.

An industry publication, Biofuelsdigest, said over the weekend that the acquisition matches GFBiochemical's commercial-scale technology for producing so-called levulinic acid, the building block from biological starches such as corn or wood, with Segetis' technology for converting the acid into bio-based specialty chemicals for plastics, fragrance, household-and-industrial cleaners, agricultural and other industries.

Segetis, which has declined to comment in recent months, is believed to be operating with a skeleton staff and may be out of money.

Segetis announced plans in 2014 for a $105 million factory at an industrial park in a wood-rich area near Hoyt Lakes, Minn.

Segetis had technical difficulties producing base feedstock in sufficient quantities to create its derivative products for customers. And the prospects for such oil-substitute companies have dimmed over the past 18 months as energy prices dropped by 70 percent.

Doug Cameron, an alternative-energy scientist who once ran Cargill's biotechnology efforts, was temporary CEO of Segetis in 2007-08. Cameron was then with Silicon Valley's Khosla Ventures, which invested $15 million in Segetis.

Cameron said he viewed the GFBiochemical's purchase as "a pretty good outcome for green chemistry in Minnesota because this company will remain in the Twin Cities with an investor who has an [ample] source of levulinic acid."

It's not clear if Khosla and other investors in flagging Segetis were able to salvage any of their capital through the transaction.