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This new plastics company backed by Pepsi is trying to save the planet

Brian Sozzi
·3 min read

Danimer Scientific CEO Stephen Croskrey is laser-focused on achieving a goal that many would say is near impossible.

That is to rid the world once and for all of the non-biodegradable plastics used across the food and beverage space that continue to clog up landfills and oceans. Danimer’s more Earth-friendly option? Plastic soda bottles, straws, and bags made from so-called biopolymers.

In Danimer’s case, these are plastic pellets made from canola oil rather than petrochemicals. The pellets promise to more quickly decompose when exposed to external bacteria.

Croskrey — Danimer’s CEO since 2016 — concedes it will be a tough mission, but he is game on.

“It’s going to take a while because there is about 800 billion pounds of plastic made every year, and we think biopolymers can replace 500 billion of those pounds. It will take a while for the industry to put in that kind of capacity to make a dent in that number, but the awesome thing is that it’s here now,” Croskrey told Yahoo Finance Live.

A warm reception after its public debut

Also there is Danimer’s arrival to public markets.

Danimer began trading on the New York Stock Exchange on Thursday after merging with a blank-check company called Live Oak Acquisition (LOAK). Investor excitement on Danimer’s debut was pretty evident. The SPAC transaction was announced on Oct. 5, and from that point Live Oak saw its shares surge nearly 140%.

Danimer is trying to rid the world once and for all of the non-biodegradable plastics. Image: Getty
Danimer is trying to rid the world once and for all of the non-biodegradable plastics. Image: Getty

It’s unsurprising to see the warm reception as Danimer checks off a lot of boxes for the bulls.

For starters, Danimer has inked partnerships with the likes of PepsiCo (PEP), Nestle, and Bacardi to introduce its more sustainable plastics into their respective packaging.

In particular, Croskrey says the company has worked with PepsiCo for 11 years, and is hopeful the beverage and snack giant will use more of its planet-friendly plastic to meet their sustainability goals. PepsiCo was a 6% shareholder in Danimer ahead of the market debut, and remains a shareholder, Croskrey says.

“Pepsi has made an announcement that by 2025 they want to convert all of their snack food packaging to bio-degradable, recyclable, or compostable materials. So that’s why we’re focused on trying to be there to meet that need. We’ve been working closely with them to be able to accomplish that,” Croskrey says.

Meanwhile, Danimer said in an investor presentation explaining the SPAC transaction that it sold out of all its production capacity for 2020. It will use the funds raised from the SPAC deal to add extra manufacturing capacity to an existing plant in Kentucky and build a new one in a bid to meet demand.

A source also tells Yahoo Finance Dunkin’ Brands has begun testing straws made via a production tie-up between Danimer and WinCup. Moreover, the source says influential investor David Einhorn of Greenlight Capital became an investor in the company in its final pre-IPO capital raise.

Live Oak — the aforementioned SPAC Danimer merged with — was formed by banking heavyweights Rich Hendrix (former FBR CEO) and Gary Wunderlich (founder of Wunderlich Securities, which was sold to FBR). The pair are expected to use their networks to further build out Danier’s institutional shareholder base.

The company is targeting $51 million in sales this year and $2.1 million in earnings before, interest, taxes and depreciation (EBITDA). Next year, it sees sales reaching $117 million and EBITDA of $21 million.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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