Chevron to Buy Biofuel Co. for $3.15B

Source: Streetwise Reports   02/28/2022 

Shares of Renewable Energy Group Inc. traded 40% higher after the biofuel producer reported it agreed to be acquired by Chevron Corp. for $61.50 per share in cash.

Global renewable fuels supplier Renewable Energy Group Inc. (REGI:NASDAQ), which is focused on production of cleaner, lower carbon transportation fuels such as biodiesel, renewable diesel and renewable chemicals, today announced that it entered into a definitive agreement to be acquired by global integrated energy firm Chevron Corp. (CVX:NYSE) in an all-cash transaction valued at $3.15 billion, or $61.50 per share.

The report indicated that the transaction price represents a 57% premium over Renewable Energy Group’s 30-day average share price as of the close of trading on Friday, February 25, 2022.

The report noted that that the merger of the two companies will bring together Renewable Energy Group’s renewable fuels production capabilities and feedstock expertise with Chevron’s large-scale manufacturing, distribution and marketing efforts.

Chevron anticipates that the acquisition of Renewable Energy Group will provide a pathway toward achieving its goal of increasing its renewable fuels production capacity to 100,000 barrels per day by 2030. In addition, the purchase will provide Chevron with access to new feedstock supplies and pre-treatment facilities.

Chevron Corp.’s Chairman and CEO Mike Wirth commented, “REG was a founder of the renewable fuels industry and has been a leading innovator ever since…Together, we can grow more quickly and efficiently than either could on its own.”

Renewable Energy Group’s President and CEO Cynthia (CJ) Warner remarked, “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…Our employees’ hard work and dedication have built a fantastic renewable fuels company and made this transaction possible. We look forward to joining Chevron’s team.”

Upon closing, Chevron intends to maintain its renewable fuels business in Ames, Iowa and has offered Renewable Energy Group’s CEO CJ Warner a seat on Chevron’s Board of Directors.

The report advised that the transaction has already been approved by each company’s respective Board of Directors and is expected to close in H2/22, subject to approval by Renewable Energy Group’s shareholders, ordinary closing conditions and regulatory approvals.

Chevron Corp. is headquartered in San Ramon, Calif. and has a market cap of over $270 billion, making it one of the largest integrated energy companies in the world. The company is engaged in most all aspects of the global energy business including oil and gas exploration, production, transportation, refining and fuel distribution. The company also manufactures lubricants, additives and petrochemicals and is engaged in power generation. In addition to its traditional business lines, the firm continues to focus on reducing carbon intensity across all of its operations and is looking to expand its lower carbon businesses.

Renewable Energy Group is based in Ames, Iowa and is a global producer and supplier of renewable biofuels. The firm produces and sells biodiesel and renewable diesel, renewable chemicals and other sustainable fuel products.

The company’s work is centered around significantly lowering greenhouse gas emissions with the objective of immediately reducing carbon impact. The firm advised that it operates 11 biorefineries in the U.S. and Europe and mentioned that during the year 2020, “it produced 519 million gallons, or 1.7 million metric tons, of cleaner fuel delivering 4.2 million metric tons of carbon reduction.”

Renewable Energy Group started off the day with a market cap of around $2.2 billion with approximately 50.27 million shares outstanding and a short interest of about 7.6%. REGI shares opened 39% higher today at $60.94 (+$17.13, +39.10%) over Friday’s $43.81 closing price. The stock has traded today between $60.25 and $61.6098 per share and is currently trading at $61.47 (+$17.66, +40.31%).

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