Solazyme Scores a New Deal
Well over a year ago, I introduced Fools to an oil company with amazing possibilities. That company was Solazyme , a business that has developed a way of creating tailored oils that can be used as fuels, nutritional additives, beauty products, and for industrial chemicals.
The interesting thing is that Solazyme creates the oils by giving feedstock -- things like switch grass, sugar cane, or corn, for example -- to its patented microalgae that then produce the desired oil.
As I pointed out at the beginning of the year, though I was selling my shares of Solazyme, I was still impressed with the company's ability to innovate and compete in a competitive market. Because of its relatively small size and lack of profitability thus far, Solazyme has relied on partnerships and joint ventures with the likes of Unilever, Dow Chemical, Bunge, and ADM.
We can now add one more company to the list of those wishing to make friends with Solazyme and its patented algae: Mitsui & Co. The company, based out of Japan, has its hands in several different industries: steel, energy, and -- of course -- chemicals, to name a few. On Wednesday, the companies announced that they had entered into a $20 million, multi-year deal to have Solazyme develop oils that could be used as aviation lubricants, as well as additives to toiletry and household products.
Though not earth-shattering in its financial considerations for Solazyme, the deal is still important, as the company is trying to scale up production to eventually reach economical production of its tailored oils. The market obviously likes the move, too, as the stock is up as much as 7% today.
What's a Fool to do?
In the end, if investors are craving some exposure to a company that has the potential to do well by doing good for the environment, they may want to consider a small position in Solazyme.
There are many different ways to play the energy sector, and our analysts have uncovered an under-the-radar company that's dominating its industry. I truly believe in the company, as I've devoted 8% of my real-life holdings to it.
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The article Solazyme Scores a New Deal originally appeared on Fool.com.
Fool contributor Brian Stoffel does not own shares in any company mentioned. The Motley Fool recommends Unilever. The Motley Fool owns shares of Solazyme. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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