The all-cash deal values Renewable Energy at $3.15 billion, or $61.50 per share. That's a premium of 40.4% to the stock's price on Friday -- and roughly 57% to its average price over the past 30 days.
"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," Renewable Energy CEO C.J. Warner said in a press release.
The merger is expected to close in the second half of the year, subject to regulatory and shareholder approval.
Investors and climate activists have called for major oil producers to curtail their emissions and invest more aggressively in clean energy projects. Chevron appears to have heeded those calls.
The oil producer is targeting 100,000 barrels per day of renewable fuels production by the end of the decade. Its purchase of Renewable Energy should help it get closer to that ambitious goal. The two companies complement each other well. Renewable Energy's feedstock expertise should pair nicely with Chevron's massive manufacturing and distribution network.
"REG was a founder of the renewable fuels industry and has been a leading innovator ever since," said Chevron CEO Mike Wirth. "Together, we can grow more quickly and efficiently than either could on its own."