This energy stock opened 50% up on Monday: here’s why

Archaea Energy Inc (NYSE: LFG) opened more than 50% up on Monday after BP plc (LON: BP) said it will buy the renewable natural gas producer for about $4.1 billion.

Archaea shareholders to get a massive premium

The all-cash agreement translates to $26 a share and is expected to close by the end of 2022. In the press release, Daniel Rice – Chairman of Archaea’s Board said:

BP will also assume roughly $800 million that Archaea has in debt. The deal is yet to secure regulatory and shareholder approval.

Shares of the British multinational ended roughly flat on Monday.

Archaea Energy to become a subsidiary of BP plc

BofA Securities and Kirkland & Ellis LLP acted as Archaea’s financial and legal advisors for the deal, respectively. According to Dave Lawler – Chairman and President of BP America:

The Houston-headquartered firm will be a subsidiary of BP plc once the transaction is complete.

In August, Archaea Energy reported a massive year-on-year growth in its second-quarter revenue to $77.2 million and raised its outlook for the full year. Wall Street currently has a consensus “buy” rating on the RNG company.