Chevron announced today that it is buying biodiesel and renewable diesel maker Renewable Energy Group (REG) for $3.15 billion. The second-largest oil company in the US by market capitalization said the all-cash deal will help it reach 100,000 B/D of renewable fuel production by 2030.
“We believe REG’s unique capabilities combined with Chevron's advanced assets and market positions create a leading provider of lower-carbon-intensity fuels with strength across the value chain,” Chevron CEO Mike Wirth said to investors following the announcement of the acquisition.
The purchase price translates to about $61.50 per share of REG, which implies a premium of about 40% over the company’s closing price on 25 February.
REG is based in Ames, Iowa, and upon closing will serve as the new headquarters of Chevron’s renewable fuels business. Chevron has also invited REG CEO CJ Warner to join its board of directors.
The acquisition marks one of the biggest investments made by a US oil producer to diversify its portfolio with new low-carbon products. Last year, Chevron said it planned to invest $10 billion in low-carbon alternatives by 2028. At the time, the company said it had earmarked about $3 billion of that sum for renewable fuels.
REG operates 11 biorefineries in the US and Europe and reports that in 2020 it produced 519 million gallons of biobased fuels.
Chevron is ambitioning to achieve net-zero operational emissions by 2050 and last week announced its first pilot to independently verify its emissions and certify some of its US sites as producers of “responsibly sourced gas.”
Chevron said the acquisition of REG is expected to close in the second half of this year.
