Texas (US): Darling Ingredients to sell $125 million in tax credits from biofuel JV

Darling Ingredients Inc. (NYSE:DAR) announced Monday an agreement to sell $125 million of production tax credits to an unnamed corporate buyer. The credits were generated under the Inflation Reduction Act by the company’s Diamond Green Diesel joint venture with Valero Energy Corporation. The company, currently valued at $4.9 billion, appears undervalued according to InvestingPro analysis.

The proceeds from the sale are expected to be received later in 2025, contingent upon satisfaction of certain funding conditions, according to a company press release. Darling Ingredients also stated it is actively marketing additional tax credits generated in 2025 for potential sale.

Diamond Green Diesel, a 50/50 joint venture between Darling Ingredients and Valero Energy, has capacity to produce more than 1.2 billion gallons of renewable diesel and sustainable aviation fuel annually.

The tax credits being sold were generated through the Clean Fuel Production Credit program established under the Inflation Reduction Act, which provides incentives for the production of low-carbon transportation fuels.

Darling Ingredients operates over 260 facilities in more than 15 countries, processing approximately 15% of the world’s animal agricultural by-products. The company transforms materials from animal agriculture and food industries into ingredients for various applications, including renewable energy production.

In other recent news, Darling Ingredients announced the departure of Matt Jansen, Chief Operating Officer – North America. Jansen’s exit qualifies him for severance benefits, contingent upon compliance with specific terms outlined in his termination agreement. UBS has maintained its Buy rating on Darling Ingredients, setting a $58.00 price target, even after lowering its earnings estimates for the remainder of 2025. The firm adjusted its third-quarter EBITDA estimate to $256 million and its fourth-quarter forecast to $284 million, both below Street consensus. Meanwhile, Baird downgraded Darling Ingredients from Outperform to Neutral, citing concerns about the RIN market and disappointing second-quarter results. On the other hand, Raymond James reiterated a Strong Buy rating with a $60.00 price target, highlighting the company’s long-term advantages in sustainable fuels. The Environmental Protection Agency’s proposal for renewable fuel standards has also been a significant development, impacting the company’s stock performance.

This article has been republished from Investing.com