U.S. energy major Chevron will acquire the outstanding shares of renewable fuels firm Renewable Energy Group for $3.15 billion in cash.
The acquisition combines renewable fuels production of Renewable Energy Group with Chevron’s large manufacturing, distribution, and marketing position.
“REG was a founder of the renewable fuels industry and has been a leading innovator ever since,” said Chevron CEO Mike Wirth . “Together, we can grow more quickly and efficiently than either could on its own.”
The transaction is to push progress toward Chevron’s goal to grow renewable fuels production capacity to 100,000 barrels per day by 2030. It also brings additional feedstock supplies and pre-treatment facilities.
After closing of the acquisition, Chevron’s renewable fuels business, Renewable Fuels – REG, will be headquartered in Ames, Iowa. In addition, CJ Warner is to join Chevron’s board of directors.
“This transaction delivers premium cash value to shareholders and will give us additional resources as we aim to accelerate growth and strengthen our collective ability to deliver the sustainable fuels our customers and the world need,” said CJ Warner , REG CEO.
The acquisition consideration is 100 percent cash. The total enterprise value of $2.75 billion includes a net cash position around $400 million greater than debt.
The boards of directors of both companies approved the transition. It will close in the second half of 2022. The acquisition is subject to REG shareholder approval. It is also subject to regulatory approvals and other customary closing conditions.
The transaction price represents a premium of around 57 per cent on a 30-day average based on closing stock prices on 25 February 2022.