Chevron is buying Renewable Energy Group in a $3.15 billion deal that will give the oil refining giant control of the largest U.S. producer of biomass-based diesel.
The companies said Monday that the all-cash transaction valued at $61.50 per share “combines REG’s growing renewable fuels production and leading feedstock capabilities with Chevron’s large manufacturing, distribution and commercial marketing position.” The deal will require board approval from both companies, REG shareholder approval and the necessary regulatory clearances.
“REG was a founder of the renewable fuels industry and has been a leading innovator ever since,” said Chevron Chairman and CEO Mike Wirth. “Together, we can grow more quickly and efficiently than either could on its own.”
Chevron is based in San Ramon, California, and is a major fuel supplier in the California market, where renewable diesel is in high demand to meet the state's low carbon fuel standard.
On a call with investors Monday, Wirth said the REG acquisition, combined with a 2021 initiative with Bunge will further the company’s goal to produce 100,000 barrels of renewable fuels per day by 2030.
Once the acquisition is complete, Chevron’s renewable fuels business will be called Renewable Fuels – REG and will be headquartered in Ames, Iowa. Current REG President and CEO CJ Warner will also become a member of Chevron’s board of directors.
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“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,” Warner said. “Our employees’ hard work and dedication have built a fantastic renewable fuels company and made this transaction possible. We look forward to joining Chevron’s team.”
REG started under the umbrella of West Central Cooperative in Ralston, Iowa, and made its first batch of biodiesel in 1996. REG now produces both biodiesel and renewable diesel.
The deal is expected to close in the second half of 2022.
Iowa Republican Sen. Chuck Grassley sent a message to Chevron via Twitter Monday, asking rhetorically if Chevron plans to “take good jobs away from Iowa? They better not.”
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