Ethanol consolidation could join Poet, VeraSun

An acquisition could be in the works that consolidates two of the top producers of ethanol in the U.S.

Sioux Falls, S.D.-based Poet said yesterday it's in talks to purchase other ethanol companies. Within hours, Brookings, S.D.-based VeraSun Energy (NYSE: VSE) said it was mulling an unsolicited takeover bid in response to its decent bankruptcy filing (see VeraSun reportedly near bankruptcy). 

Poet is the country's largest producer of ethanol. Together, Poet and VeraSun produce a third of the nation's ethanol (see Poet takes top spot in ethanol).

Neither company has commented on reports of the discussions, but there are a number of other ethanol makers filing for bankruptcy or closing plants because of fluctuating corn prices and the economic crunch (see Using superpowers for the greater cleantech good).

Denver, Colo.-based ethanol firm Biofuel Energy Corp. blamed a hedging strategy for its financial troubles. Chesterfield, Mo.-based Abengoa Bioenergy New Technologies temporarily closed its ethanol plant in Portales, N.M. Also citing the economy, Bioenergy Development has scrapped plans for a $62 million ethanol plant near Gary, Indiana. And Pratt, Kan.-based Gateway Ethanol filed for Chapter 11 bankruptcy protection following news that it defaulted on a $54 million loan. The 55-million-gallon plant began production in 2007 but was forced to close because of its financial troubles.

However, the prospect for ethanol in the U.S.is still bright. Just last week, the U.S. Environmental Protection Agency said that starting in 2009 gasoline must contain a 10.21 percent blend of ethanol, creating a market for 11.1 billion gallons of ethanol next year (see Ethanol blend increases while oil reaches new low).