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BP PLC on Monday said it has agreed to acquire US renewable natural gas producer Archaea Energy Inc.
The London-based oil major said the $3.3 billion acquisition will accelerate the growth of its strategic bioenergy transition growth engine. BP pay $26 per Archaea share, a 54% premium to the New York Stock Exchange listing's closing price on Friday and a 38% premium to its average price over the past 30 days.
Archaea shares were up 54% at $25.91 in pre-market trade on Monday.
‘Together with around $800 million net debt, the total enterprise value is $4.1 billion. Subject to regulatory approvals and Archaea shareholder approval, bp is targeting acquisition completion by the end of 2022,’ BP said.
Houston, Texas-based Archaea operates 50 renewable natural gas and landfill gas-to-energy facilities across the US, ‘with development pipeline supporting potential for around five-fold increase in RNG volumes by 2030’, BP noted.
Once integrated, the acquisition is expected to be accretive to earnings and free cash flow per share, and to deliver ‘double-digit returns’.
The purchase will double the earnings before interest, tax, depreciation and amortisation that BP expects from biogas to around $2 billion by 2030.
It also supports an increase in the oil firm's target of Ebitda from transition growth businesses to reach more than $10 billion by 2030, compared to $9 to 10 billion previously.
Shares in BP were down 0.4% at 453.20 pence each in London on Monday early afternoon.
‘Archaea is a fantastic fast-growing business, and bp will add distinctive value through our trading business and customer reach. It will accelerate our key bioenergy growth engine, creating a real leader in the biogas sector, and support our net zero ambition. And, importantly, we're doing this while remaining focused on the disciplined execution of our financial frame,’ said Chief Executive Bernard Looney.
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