Archaea Energy (NYSE:LFG) stock is rocketing higher on Monday thanks to news that BP (NYSE:BP) is acquiring the company.
According to a press release from BP, the gas and oil giant will spend $3.3 billion in cash to bring Archaea under its control. The company notes that this is in addition to $800 million of net debt.
The acquisition of Archaea Energy expands BP’s position in the bioenergy sector. This is a market that BP wants to continue growing in as it seeks to reach net-zero carbon emissions by 2050.
Bernard Looney, CEO of BP, said the following about the deal for Archaea Energy:
“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.”
Details of the Deal
The $3.3 billion offer from BP comes to $26 per share of LFG stock. For the record, that represents a “38% premium to Archaea’s 30-day volume weighted average share price.”
Archaea and BP expect this deal to close by the end of 2022. This will require approval from both regulators and shareholders, as well as the completion of other customary closing conditions.
LFG stock is up 52.4% as of Monday morning.
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On the date of publication, William White did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.