Chevron acquires Renewable Energy Group

It seems Chevron is all in when it comes to renewable fuels investments after the oil and energy company announced today that it will acquire US-based Renewable Energy Group (REG) in an all-cash transaction valued at $3.15 billion or $61.50/share. The transaction price represents a premium of around 57% on a 30-day average based on closing stock prices on February 25, 2022. The total enterprise value of $2.75 billion includes a net cash position of around $400 million greater than debt.

The transaction is expected to accelerate progress toward Chevron’s goal to grow renewable fuels production capacity to 100,000 barrels per day by 2030 and 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. The transaction is expected to close in the second half of 2022.

The transaction is expected to be accretive to Chevron earnings in the first year after closing and accretive to free cash flow after the start-up of REG’s Geismar expansion.

Tecnon OrbiChem’s Bio-Materials portfolio has been reporting REG’s activities for a long time (REG is also a major crude glycerine producer from its biodiesel facilities). I will be reporting more about this announcement on our Bio-Materials March publication (subscription required).