Biochemicals maker Metabolix Inc. (MBLX) said it will reduce its
bioplastics business after partner Archer Daniels Midland Co. (ADM)
decided to pull out of the two companies' joint venture.
Metabolix shares dropped 45% to $3.30 after hours following a
halt on the stock. It had climbed 23% over the past three months
through Thursday's close.
News of ADM's choice to leave the companies' Telles LLC joint
venture comes a day after the agribusiness giant said it would cut
1,000 jobs, or 3% of its work force, amid simmering investor
discontent about the expansion of its renewable fuels business.
Formed in 2006, the Telles joint venture produces plant-based
biodegradable plastics for the U.S., Europe and other countries.
Metabolix said an ADM review of the business had concluded its
financial returns were too uncertain.
Metabolix said it is still working out the details of its plan
to trim its bioplastics business, a move that will cost between $2
million and $3 million in restructuring charges this year.
The company said it will continue focusing on developing
renewable industrial chemicals, though management is also
conducting a strategic review of its business priorities for
2012.
"Over the past few years, we now have proven the technology at
industrial scale and believe that we now have the opportunity to
launch this business with a different business model," Chief
Executive Richard Eno said. "We will be evaluating alternate plans
for commercialization and clearly wish to supply this growing
market in the future."
ADM will still keep a Clinton, Iowa, factory that has produced
the plastic resin after it withdraws from the partnership on Feb.
8. Metabolix will retain all the technology used in the joint
venture.
Metabolix ended 2011 with an unaudited cash and investment
balance topping $78 million.
-By Drew FitzGerald, Dow Jones Newswires; 212-416-2909; Andrew.FitzGerald@dowjones.com