February 28 (Renewables Now) – US oil giant Chevron Corp (NYSE:CVX) has struck a USD-3.15-billion (EUR 2.8bn) deal to take over Renewable Energy Group Inc (NASDAQ:REGI) in pursuit of its objective to grow renewable fuels production capacity to 100,000 barrels per day by 2030.
The transaction will combine Chevron’s large manufacturing, distribution and commercial marketing position with REG’s growing renewable fuels production and strong feedstock capabilities.
At present, REG operates 11 biorefineries in the US and Europe, and in 2020 produced 519 million gallons of cleaner fuel.
Chevron’s chairman and CEO Mike Wirth commented that the two companies can grow more quickly together than if they remain on their own.
“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, president and CEO of REG.
As part of the agreement, Chevron will pay USD 61.50 per share in cash, which is a 57% premium on a 30-day average based on closing stock prices on February 25, 2022.
Chevron expects this acquisition to build on its earnings in the first year following the closing of the transaction and to be accretive to free cash flow after completion of REG’s expansion of the Geismar biorefinery in Louisiana.
REG Geismar was the country’s first renewable diesel plant and was acquired by the company in 2014. In October 2020, REG announced it planned to expand the annual production capacity of the particular facility by 250 million gallons to 340 million gallons. At the time, it estimated the project cost at USD 825 million.
Subject to approval from REG’s shareholders and regulators, Chevron’s acquisition of the company should close in the second half of the year.
Goldman Sachs & Co LLC is acting as financial advisor to Chevron, while Paul, Weiss, Rifkind, Wharton & Garrison LLP serves as its legal advisor. Guggenheim Securities LLC in turn is the financial advisor of REG and Latham & Watkins LLP is its legal advisor.
(USD 1.0 = EUR 0.894)
