Chevron to acquire Biodiesel developer REG for $3.15 billion

March 2, 2022
Biodiesel emits less than half of the greenhouse gas emissions as petroleum diesel. Biodiesel is produced from agricultural waste and food crops

Integrated oil and gas firm Chevron has signed a definitive agreement to acquire the outstanding shares of Renewable Energy Group, a biodiesel production firm, in a $3.15 billion all-cash transaction.

The transaction is expected to close in the second half of this year, subject to REG shareholder approval, regulatory approvals and other customary closing conditions. The Board of Directors of both the companies have granted approval for the transaction.

The total enterprise value of $2.75 billion includes a net cash position of around $400 million more than debt. The transaction price represents a premium of 57% on the 30-day average based on the closing stock prices as on 25 February.

The transaction is expected to contribute to Chevron’s progress towards its goal of increasing renewable fuels production capacity to 100,000 barrels per day by 2030. It will also add pre-treatment facilities and feedstock supplies with the addition of REG’s feedstock and fuel production.

Chevron CEO Mike Wirth has pointed to Ames, Iowa-based REG and biodiesel as a key to his company's shift to lower carbon and renewable resources. Biodiesel emits less than half of the greenhouse gas emissions as petroleum diesel.

Biodiesel is produced from agricultural waste and food crops.

Goldman Sachs & Co. LLC is the financial advisor and Paul, Weiss, Rifkind, Wharton & Garrison LLP is the legal advisor to Chevron. Meanwhile, Guggenheim Securities is the financial advisor and Latham & Watkins LLP is the legal advisor to REG.