BP Plc (BP.L) will buy U.S.-based renewable natural gas (RNG) producer Archaea Energy Inc (LFG.N) for about $4.1 billion including debt, the companies said on Monday, as the British energy major seeks to expand its alternative fuels business.
The deal will the largest ever RNG acquisition, topping Chevron Corp's (CVX.N) $3.15 billion buyout of biodiesel maker Renewable Energy Group Inc earlier this year. BP has offered $26 in cash for each Archaea share, or $3.3 billion, and will take on about $800 million of net debt.
The offer represents a premium of 54% to Archaea's closing price on Friday. Archaea's shares jumped 53% in premarket trade.
Houston, Texas-based Archaea operates 50 RNG and landfill gas-to-energy facilities across the United States, with development pipeline supporting potential for around five-fold increase in RNG volumes by 2030. The deal will double the expected earnings before interest, taxes, depreciation, and amortization (EBITDA) from biogas to around $2 billion by 2030, BP said.
