Why is Archaea Energy's (LFG) stock rising today?

October 17, 2022 07:19 AM PDT | By Rupam Roy

Image source: © Timonschneider | Megapixl.com

What's in the acquisition deal?

Archaea Energy is a utility holding firm and is one of the major RNG producers in the US, operating around 50 RNG and landfill gas-to-energy facilities in the US. The company says that it produces about six thousand barrels of oil equivalent per day (boe/d) of RNG.

The Texas-based company stated on October 17, that it had nodded to be acquired by the leading oil and gas firm, BP p.l.c. (NYSE: BP). BP would be paying around US$ 26 per share of Archaea Class A and Class B shares in cash.

The total acquisition would be valued at around US$ 4.1 billion, which includes net debt of about US$ 800 million, the company said.

The cash consideration has represented around 38 per cent premium to the RNG firm's volume-weighted average share price for the last 30 days that ended last Friday, October 14.

BP p.l.c. said that the acquisition would help the company in accelerating the expansion of its bioenergy operations and "transition growth engine". In addition to that, the oil and gas company also raised its biogas EBITDA expectations by double to around US$ 2 billion through 2030.

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Bottom line:

The price of the LFG stock jumped 52.34 per cent at 9:42 am ET on Monday, October 17, to trade at US$ 25.715, while its trading volume totaled over 7.93 million. The utility company's stock closed at US$ 16.88 in the previous session.

Following the latest acquisition news, the stock price of BP soared nearly 1.12 per cent to trade at US$ 30.67 at 10:00 am ET on October 17, and its volume was around 2.29 million.

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