Key points:
- Archaea shares rally premarket on news of BP deal
- BP agreed to acquire the company for $3.3bn
- The deal will will accelerate BP’s bioenergy transition
Archaea Energy (NYSE: LFG) shares surged 52.31% premarket after BP agreed to purchase the biogas firm as it continues to expand its alternative fuels business.
The deal, worth approximately $4.1 billion, will be the largest RNG acquisition since Chevron’s $3.15 billion buyout of the Renewable Energy group earlier this year.
BP has made a cash offer of $26 for each share, roughly $3.3 billion, as well as around $800 million of net debt.
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Also Read: What Is the Impact of Changing Oil Prices?
The oil and gas company believes the acquisition will accelerate the growth of BP’s strategic bioenergy transition. According to the company, the agreement would also increase the estimated biogas EBITDA by roughly $2 billion by 2030.
“Archaea is a fantastic fast-growing business, and BP will add distinctive value through our trading business and customer reach,” commented Bernard Looney, BP’s Chief Executive.
Looney further stated, “it will accelerate our key bioenergy growth engine, creating a real leader in the biogas sector, and support our net zero ambition.”
In the US, Archaea manages 50 RNG and landfill gas-to-energy facilities, with plans to potentially grow RNG volumes by five times by 2030.
The agreement would strengthen BP’s current biogas operations and further its growth in the US, a crucial and quickly expanding biogas market.
Archaea shares are trading 52.31% higher at $25.71 at the time of writing
