In what amounts to the largest renewable energy transaction this year, Houston-based Archaea Energy Inc. announced Monday that it has agreed to be acquired by BP for $4.1 billion.
The BP offer for Archaea, which specializes in the production of biofueled renewable natural gas, includes $800 million in Archaea debt and represents a premium of 38 percent based on Archaea’s volume weighted share price for the 30 days ending October 14.
In a statement, Nick Stork, co-founder and CEO of Archaea, described BP as 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’.”
Archaea was advised by Kirkland & Ellis with a team led from New York and Houston by partners David Feirstein and Cyril Jones. Also on the team were Steven Li and associates Alexandra Gallogly and Christian Mahre, capital markets partners Matt Pacey and Lanchi Huynh and associate Logan Weissler, executive compensation partners Stephen Jacobson and Jabir Yusoff and associate Brandon Newman, and tax partners Michael Beinus and Vivek Ratnam.
Stork and other members of the management team, who together hold approximately 27 percent of the company, were advised by Jones Day, led by Pittsburgh-based partners Dave Grubman (M&A) and James Kitchen (Investment & White Collar Defense).
Upon closing, which is expected by year’s end, Archaea will operate as a subsidiary of BP. The company captures emissions from organic material obtained from landfills, farms and wastewater treatment plants for the production of RNG.
In May, Archaea inked a $1.1 billion joint venture agreement with Republic Services Inc. for the development of 39 landfill biogas to RNG operations across the U.S.
That deal was one of a number of increasingly upscale investments in renewable energy and storage just this year by global energy companies, institutional investors and PE firms.
In February, Chevron acquired Iowa-based biofuels company Renewable Energy Corp. for $3.15 billion.
In January, Blackstone Infrastructure Partners acquired Invenergy Renewables for $3 billion.
In May, French energy giant TotalEnergies paid $1.6 billion to acquire half of Global Infrastructure Partners’ investment in Clearway Group, a privately held renewable energy developer.
And in September Brookfield Renewables paid $1 billion to acquire the Quinbrook Infrastructure Partners portfolio company, Scout Clean Energy.