Chevron Corp. (NYSE: CVX) announced on Monday that it has agreed to acquire sustainable fuel producer Renewable Energy Group Inc. (NASDAQ: REGI) for $3.15 billion. The deal is expected to close in the second half of 2022.
REG’s fuels lower greenhouse gas emissions to reduce carbon impact. The acquisition combines REG’s renewable fuels production and feedstock capabilities with Chevron’s large manufacturing, distribution, and commercial marketing position.
“REG was a founder of the renewable fuels industry and has been a leading innovator ever since,” said Chevron Chairman and CEO Mike Wirth in a news release. “Together, we can grow more quickly and efficiently than either could on its own.”
REG uses a global integrated procurement, distribution, and logistics network to operate 11 biorefineries in the U.S. and Europe. In 2020, REG produced 1.7 million metric tons of cleaner fuel delivering 4.2 million metric tons of carbon reduction.
This acquisition is expected to accelerate progress toward Chevron’s goal to grow renewable fuels production capacity to 100,000 barrels per day by 2030 and brings additional feedstock supplies and pre-treatment facilities. After the deal closes, Chevron’s renewable fuels business, Renewable Fuels – REG, will be headquartered in Ames, Iowa.
“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,” said CJ Warner, REG president and CEO. Warner is expected to join Chevron’s board.
This deal could impact the American Century Focused Large Cap Value ETF (FLV) and the American Century STOXX U.S. Quality Value ETF (NYSEArca: VALQ), not to mention the Avantis U.S. Large Cap Value ETF (AVLV) and the Avantis U.S. Equity ETF (AVUS), all of which currently have holdings in Chevron.
FLV tries to achieve long-term returns through an investment process that seeks to identify value and minimize volatility. FLV holdings and value stocks usually trade at lower prices relative to fundamental value measures, like earnings and the book value of assets.
VALQ, which follows the iSTOXX® American Century® USA Quality Value Index, holds 237 stocks and provides exposure to sustainable and growing dividends.
AVLV invests in a range of U.S. large-cap companies and seeks companies that are trading at low valuations with higher profitability ratios. AVUS invests primarily in a diverse group of U.S. companies of all market capitalizations, across sectors and industries, emphasizing investment in companies believed to have higher expected returns.
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