Both the companies have inked an asset purchase agreement to this effect.
Under the agreed terms, REG will pay close to $11m in cash and will issue 500,000 shares of REG common stock for the 20 million gallon biodiesel facility in DeForest, Wisconsin.
Using REG patented and proven high free fatty acid processing technology the facility produces biodiesel from lower cost feedstocks including yellow grease, rendered animal fats, and inedible corn oil in addition to refined vegetable oils.
REG president and CEO Daniel J. Oh said: "With growing biomass-based diesel volumes in the U.S., REG is continuing its growth as well.
"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."
Upon closing of the transaction, REG will have 11 active biomass-based diesel refineries in seven states including Iowa, Illinois, Texas, Louisiana, Minnesota, Washington and Wisconsin with a combined nameplate production capacity of 452 million gallons.
REG also agreed to pay Sanimax an additional $5m in cash over a period of up to seven years after closing based on the volume of biodiesel produced at the plant.
The plant will be re-named as REG Madison.
Image: Renewable Energy Group is adding the 20 million gallon Sanimax biodiesel plant to its growing fleet of lower-cost, lower-carbon biorefineries. Photo: courtesy of REG.
