Renewable Energy Group's Stock Is Spiking Higher: Here's Why

Shares of

were trading higher by more than 5 percent late Wednesday morning after the company

it has acquired a biodiesel refinery in Wisconsin. Renewable Energy Group has agreed to pay Sanimax Energy $11 million in cash and will issue 500,000 shares of its common stock. In return, the company has acquired a 20 million gallon nameplate capacity biodiesel refinery in DeForest, Wisconsin. The refinery produces biodiesel from lower cost feedstocks including yellow grease, rendered animal fats, and inedible corn oil in addition to refined vegetable oils. Renewable Energy Group will also pay Sanimax an additional $5 million in cash over a period of 7 years. Upon completion of the transaction, Renewable Energy Group will have 11 active biomass-based diesel refineries in North America with a combined production capacity of 452 million gallons. "With growing biomass-based diesel volumes in the U.S., REG is continuing its growth as well," said Daniel J. Oh, REG President and CEO. "This plant will add to our network of lower-cost, lower-carbon intensity, multi-feedstock biorefineries. Having a dependable feedstock supplier co-located next door should provide an opportunity for additional cost savings and logistical advantages. We have done business with Sanimax and the Couture family for many years and look forward to a continuing prosperous relationship."