Archaea Energy Inc., a renewable natural gas (RNG) company, announced that it has agreed to be acquired by bp for US$26 per Archaea Class A and Class B share in cash, or a total enterprise value of approximately US$4.1 billion, including approximately US$800 million of net debt. The cash consideration represents an approximately 38% premium to Archaea’s volume weighted average share price for the 30 days ending October 14, 2022.
“Archaea was founded with a mission to build the world’s leading RNG development company to reduce global emissions and make multi-generational sustainability impacts,” said Nick Stork, CEO and co-founder of Archaea. “In a very short period, we have rapidly become a leading RNG platform in the United States, and today’s announcement will further enable this business to realize its full potential. bp is a world-class partner and a strong fit for Archaea, with a strategic focus on bioenergy and an operational history in the RNG value chain that is fully aligned with ours and our partners’.”
“After a thorough review, our board determined that combining Archaea’s RNG assets and our strong development backlog with bp’s existing bioenergy business and deep operational and financial resources is the best way to create a stronger platform to achieve Archaea’s full potential, while maximizing value for our shareholders,” said Daniel Rice, chair of Archaea’s Board. “This news would not be possible without the entire Archaea organization, our best-in-class employees and our industry partners.”
Strategic Benefits For Archaea And Its Stakeholders
bp provides Archaea access to platforms, capabilities, and capital resources for acceleration of its growth plans. Archaea’s business will be able to access bp’s trading capabilities and broad customer base, further helping many of bp’s customers achieve their decarbonization goals. Archaea will be integral to bp’s existing bioenergy business, which has established key positions in the segment and is one of bp’s key transition growth engines, which is anticipated to further Archaea’s growth into international markets.
Additional Transaction Details
Subject to regulatory approvals and Archaea shareholder approval, the parties are targeting closing the acquisition by the end of 2022. Certain existing Archaea shareholders, who collectively own approximately 27% of Archaea’s outstanding shares, have agreed to vote their shares in favor of the transaction. Closing is not subject to any financing condition.
Upon completion of the transaction, Archaea will operate as a subsidiary within bp and become part of the larger global organization.
Advisors
BofA Securities acted as financial advisor to Archaea and Kirkland & Ellis LLP acted as Archaea’s legal advisor.
