NEW YORK (AP) -- Archer Daniels Midland Co. said Thursday it is ending a biodegradable plastics joint venture with Metabolix Inc. because of the venture's cost, and uncertainty about its returns.
The companies said the joint venture, which is called Telles, will be dissolved on Feb. 8. Telles makes plastics from corn sugar that biodegrade in natural soil and water and in home or industrial composting systems. The FDA has approved Mirel plastics for use in plastic utensils and lids. Archer Daniels Midland announced on Wednesday that it plans to eliminate 1,000 jobs, and it said Thursday that it was not clear how much business Mirel would get.
"Uncertainty around projected capital and production costs, combined with the rate of market adoption, led to projected financial returns for ADM that are too uncertain," said Mark Bemis, the president of Archer Daniels Midland's corn business. The companies created the joint venture in July 2006.
The news sent shares of Metabolix plunging $2.68, or 45 percent, to $3.31 in aftermarket trading following the announcement.
Metabolix, which is based in Cambridge, Mass., said it is disappointed with the decision and will consider new plans to commercialize the Mirel and Mvera bioplastics. The company said it will regain ownership of all the technology used in the joint venture, and Archer Daniels Midland will retain ownership of the manufacturing facility in Iowa that has been making the Mirel resins.
Archer Daniels Midland, of Decatur, Ill., said it will take a one-time pretax charge of $300 million to $360 million in the second quarter as a result of its decision. It said the cash portion of the charge should be less than $5 million.
Archer Daniels Midland stock gained 21 cents to $29.14 during the day and picked up another 4 cents to $29.18 aftermarket.