• First company with fully integrated technologies for cellulosic ethanol production

• Combined company will enhance existing Diversa enzyme business with aggressive push into cellulosic ethanol plant development and production

Diversa Corporation (Nasdaq: DVSA) and Celunol Corp. today announced they have signed a definitive merger agreement to create a new leader in the emerging cellulosic ethanol industry.

The combined company will be the first within the cellulosic ethanol industry to possess integrated end-to-end capabilities in pre-treatment, novel enzyme development, fermentation, engineering, and project development. It will seek to build a global enterprise as a leading producer of cellulosic ethanol and as a strategic partner in bio-refineries around the world. At the same time, the company will continue to pursue broad market opportunities for specialty industrial enzymes within the areas of alternative fuels, specialty industrial processes, and health and nutrition, with a primary focus on enzymes for the production of biofuels. The combined company will be headquartered in Cambridge, Massachusetts and have research and operations facilities in San Diego, California; Jennings, Louisiana; and Gainesville, Florida.

Celunol has recently commenced operations of the nation's first cellulosic ethanol pilot facility in Jennings, Louisiana and expects to complete a 1.4 million gallons-per-year, demonstration-scale facility to produce cellulosic ethanol from sugarcane bagasse and specially-bred energy cane by the end of 2007. In addition, Celunol's process technology has been licensed by Tokyo- based Marubeni Corp. and has been incorporated into BioEthanol Japan's 1.4 million liter-per-year cellulosic ethanol plant in Osaka, Japan -- the world's first commercial-scale plant to produce cellulosic ethanol from wood construction waste. The combined company plans to bring its first U.S. commercial-scale cellulosic ethanol plants into production in late 2009.

Under the terms of the merger agreement, Diversa will issue 15,000,000 shares to acquire the outstanding equity of Celunol. In addition, Diversa will provide Celunol with up to $20 million in debt financing to fund its operations prior to the closing, which will be assumed by Diversa at the closing. On a pro-forma, fully diluted basis, Diversa stockholders will retain ownership of approximately 76 percent of the combined company, and Celunol stockholders and option holders will own approximately 24 percent. The merger agreement has been unanimously approved by each company's board of directors and is subject to approval by their respective stockholders, regulatory agencies, and the satisfaction of other customary closing conditions. The transaction is expected to be completed by the end of the second quarter of 2007.

"Merging our companies significantly accelerates Diversa's and Celunol's strategic plans and creates a new company capable of technical and commercial leadership in the emerging cellulosic ethanol industry," said James H. Cavanaugh, Ph.D., chairman of the Diversa board of directors. "I would like to take this opportunity to thank Ed Shonsey and his Diversa management team for establishing and executing a business strategy with increasing focus on biofuels that has paved the way for the creation of our newly configured company."

Carlos A. Riva, the president and chief executive officer of Celunol, will become the chief executive officer of the combined company and a member of its board of directors upon closing of the merger. John A. McCarthy Jr., the executive vice president and chief financial officer of Celunol, will become the chief financial officer of the combined company upon closing of the merger. As part of the merger, two members of Celunol's board of directors, in addition to Mr. Riva, will be added to the Diversa board. Due to the complementary nature of the two companies, few staffing reductions are expected to occur as a result of the merger.

Mr. Riva, 53, is a veteran of the international power and energy industries, with an extensive background in energy and infrastructure project development. Prior to Celunol, Mr. Riva served as an executive director of Amec plc, a major global construction and engineering company based in the U.K. Mr. Riva was also chief executive officer of InterGen N.V., a Boston- based joint venture between subsidiaries of Royal Dutch Shell plc and Bechtel Corporation, and president and chief operating officer of J. Makowski Company, an independent-power producer based in the Northeastern United States. Mr. Riva holds degrees from MIT, Stanford University, and Harvard Business School.

"The growth of the biofuels industry, and cellulosic ethanol in particular, is one of the most important developments in today's energy sector," said Mr. Riva. "The global market demand for alternative fuels such as cellulosic ethanol is potentially massive. We believe the combined strengths of both companies will enable us to accelerate commercialization of cellulosic ethanol by leveraging our skills and proprietary knowledge into large-scale biofuels project developments. We have recently completed upgrades at our pilot-scale facility in Jennings, Louisiana, enabling it to be used to prove out our technologies across a range of biomass feedstocks. We will shortly commence construction of the nation's first demonstration-scale cellulosic ethanol facility at the same site."

"Carlos is a seasoned executive with a track record of leveraging energy technologies and market knowledge into successful commercial enterprises," stated Dr. Cavanaugh. "In selecting Carlos to lead the combined company, the Diversa board is very confident in his ability to drive the combined companies to greater levels of success in their existing areas than either company could achieve separately."

Mr. McCarthy, 48, has spent fifteen years in the healthcare/life sciences industry in a variety of senior financial and operational roles, managing the transformational growth of early-stage companies into diversified, publicly- traded operating entities. Prior to joining Celunol, Mr. McCarthy served as chief financial officer of Xanthus Pharmaceuticals, Synta Pharmaceuticals, and Exact Sciences, as well as a divisional president of Concentra Managed Care. Prior to his life sciences career, Mr. McCarthy worked for Morgan Stanley & Co. in their investment banking division. Mr. McCarthy holds degrees from Lehigh University and Harvard Business School.

The growing need for alternatives to petroleum-based fuels has emerged as one of the nation's most urgent public policy priorities and enjoys strong, bipartisan support among public policymakers at the federal and state level. In the U.S. alone the total market size for automotive fuels is currently 140 billion gallons per year. Of this amount, five to six billion gallons per year of production capacity, or less than five percent, are currently met by ethanol primarily derived from corn and other grains. In January's State of the Union address, President Bush articulated a national "twenty in ten" goal of reducing gasoline consumption by 20 percent over ten years, calling for a seven-fold increase in production of ethanol and other biofuels to meet this goal. The need for increased cellulosic ethanol supplies is due to a variety of factors, including the rising cost and dwindling availability of petroleum, the geopolitical risk of import dependency, and the vast potential environmental benefits from a significant reduction of greenhouse gasses created by non-renewable fossil fuels. The commercialization of cellulosic ethanol creates the potential for the production of significantly larger quantities of ethanol and other biofuels utilizing multiple feedstocks in the long term, and in a wider variety of locations throughout the world.

UBS Investment Bank acted as financial advisor and Cooley Godward Kronish LLP acted as legal counsel to Diversa. Bingham McCutchen LLP acted as legal counsel to Celunol.

Since 1994, San Diego-based Diversa Corporation has pioneered the development of high-performance specialty enzymes. Diversa possesses the world's broadest array of enzymes derived from bio-diverse environments as well as patented DirectEvolution(R) technologies. Diversa customizes enzymes for manufacturers within the alternative fuel, industrial, and health and nutrition markets to enable higher throughput, lower costs, and improved environmental outcomes. For more information, please visit http://www.diversa.com.

Celunol Corp. is a privately-held company headquartered in Cambridge, Massachusetts moving rapidly to commercialize its proprietary technology for producing ethanol from a wide array of cellulosic biomass feedstocks - including sugarcane bagasse, agricultural waste, wood products and dedicated energy crops. Celunol has recently completed an upgrade of its existing pilot facility for broader research and development application purposes and will shortly commence construction of a 1.4 million gallons-per-year capacity demonstration plant. Celunol aspires to develop and build a portfolio of cellulosic ethanol facilities in the U.S. and abroad, both company-managed and controlled as well as in partnership with other industry participants. Celunol's stockholders include Khosla Ventures, Rho Capital Partners, Charles River Ventures and Braemar Energy Ventures. For more information, please visit http://www.celunol.com.