Chevron Corporation (NYSE: CVX) inked a definitive agreement under which Chevron will buy the outstanding shares of Renewable Energy Group (REG) in an all-cash transaction valued at $3.15 billion, or $61.50 per share. REG's rising renewable fuels production and superior feedstock capabilities are combined with Chevron's huge production, distribution, and commercial marketing positions in this transaction.
The deal is intended to help Chevron meet its target of increasing renewable fuels production capacity to 100,000 barrels per day by 2030 by providing more feedstock and pre-treatment facilities. Chevron's renewable fuels company, Renewable Fuels, will be in Ames, Iowa after the deal closes. CJ Warner is also likely to join the Chevron Board of Directors.
Transaction Overview
Furthermore, the purchase price is entirely paid in cash. A net cash position of roughly $400 million exceeds debt in the total enterprise value of $2.75 billion. Both firms' Boards of Directors have authorized the deal, which is anticipated to finalize in the second half of 2022. The acquisition must be approved by REG shareholders. It's also subject to regulatory clearances and other standard closing requirements.
REG President & CEO stated that this deal provides premium cash value to shareholders and provides extra resources as the company seeks to accelerate expansion and increase its collective ability to offer the sustainable fuels that its customers and the world require. Its employees' dedication and hard work have resulted in a superb renewable fuels firm and enabled this purchase.