April 30, 2014 6:00 pm JST

Malaysia's Sime Darby to invest $30M in US biotech company

CK TAN, Nikkei staff writer

U.S. President Barack Obama, back right, and Malaysian Prime Minister Najib Razak, center, witness the signing of a major business agreement between Verdezyne and Sime Darby while in Kuala Lumpur, April 28. © Reuters

KUALA LUMPUR -- Malaysian plantation company Sime Darby is acquiring a 30% stake worth $30 million in California-based biotechnology company Verdezyne to pursue strategic growth areas for its palm oil plantation business.

     Verdezyne has know-how to produce chemicals from sustainable materials such as palm oil. Such chemicals, which are used to make industrial products like clothing and adhesives, are currently obtained from petroleum-based feedstock.

     Sime Darby hopes its investment in Verdezyne will enable it to tap into the U.S. company's expertise to turn palm-based commodities into higher value products.

     "Sime Darby is taking strategically measured steps to build and nurture a sustainable portfolio of palm-related industrial biotechnology companies," the Group CEO Bakke Salleh said in a statement on Monday. "There are exciting opportunities for us to leverage with our substantial plantation assets, and we are keen to capitalize on these for future growth."

     The partnership will enable Verdezyne to secure feedstock supplies from Sime Darby for its chemical factory, which will be built in Malaysia, according to local news reports.

     Both companies signed the investment agreement on Monday, according to state news agency Bernama. The signing was witnessed by Prime Minister Najib Razak and U.S. President Barack Obama, during Obama's official visit to Malaysia.

     Sime Darby is one of the largest palm oil producers in the world. Crude palm oil, which is obtained from fresh palm fruit bunches, is used to make cooking oil. Its by-products are used to produce fertilizer, animal feed, fatty acids for cosmetics and biodiesel.