Dutch firm acquires Delta-T

By Jerry W. Kram | August 27, 2007
Williamsburg, Va.-based Delta-T Corp., a leading process technology and equipment provider for the ethanol industry, is being acquired by Dutch engineering, procurement and construction firm Bateman Litwin N.V. for $45 million and 11.8 million shares of Bateman Litwin stock. At press time, the acquisition was conditional on approval by Bateman Litwin stockholders at a general meeting to be held in August.

Bateman Litwin is a contractor and technology provider for the renewable energy, phosphate and solvent-dependent industries. Delta-T had revenues of $213 million with a backlog of contracts in progress of more than $500 million. Bateman Litwin has about $1 billion in contracts in progress.

The acquisition will provide Bateman Litwin an immediate entry into the booming U.S. ethanol plant construction market, which is estimated to be more than $10 billion by 2013. Delta-T also has a significant market presence in Australia, India, China and Europe. "We are delighted to welcome Delta-T and its workforce to the (Bateman Litwin) Group," said Shuki Raz, CEO of Bateman Litwin. "Delta-T is an outstanding technologist in its field and a leading engineering, procurement and technology provider in the United States, with an estimated 25 percent market share in the bioethanol services sector."

Delta-T will be a separate business unit within Bateman Litwin's energy division, said Rob Swain, who was president of Delta-T before the merger and is now CEO. "There will not be any 'revolutions' in the current management, nor will there be a material departure from any of its current businesses or partnering relationships," Swain said. "Delta-T already has a good business model with many excellent partners, and we don't want to change that or undermine the volume of business with our partners in any way."

Delta-T will retain its brand name. Rob Swain will report directly to Raz, while Bibb Swain, former Delta-T CEO, will become company chairman and serve as technology director.

"This acquisition is an exceptional step forward for Bateman Litwin," Raz said. "It supports our strategy by adding a contiguous field of process engineering, as well as a new proprietary technology to our product offering. It also provides the group with a powerful position in the fast-growing renewable energy market. Bateman Litwin [went public] in 2006 with the ambition to grow both organically and through acquisition. This transaction combines both objectives and positions Bateman Litwin as a leader in the rapidly developing services industry for biofuels."

Swain sees change ahead in the ethanol industry and expects the combination of Delta-T and Bateman Litwin to be well-placed to meet future challenges. "We expect that there will be a consolidation in the industry, and by the end of the day, there will be seven to 10 big groups, each of which will eventually have more than a billion gallons of capacity that will dominate the ethanol industry," he said. "Also, we see a trend where these large entities will invest in other major ethanol-producing markets around the world to further increase economies of scale and to help diversify for risk protection. Bateman Litwin brings an expansive talent to add to the engineering, procurement and construction pool."

Bateman Litwin shares stood at about 3 pounds (approximately $6) per share on the London Stock Exchange in late July. Delta-T is a privately held firm.