US-based renewable natural gas (RNG) developer Archaea Energy has agreed to merge with Aria Energy, led by a special purpose acquisition firm Rice Acquisition (RAC).
The business combination of Archaea and Aria is expected to create a large-scale RNG platform in the North American landfill gas (LFG) sector.
The combined company, named as Archaea Energy, will focus on reducing carbon emissions through landfill gas conversion, CO2 sequestration, and green hydrogen.
Aria is a portfolio company of funds managed by the Infrastructure and Power strategy of Ares Management. Its portfolio includes operational LFG assets and a deep inventory of greenfield LFG-to-RNG projects and electric-to-RNG conversion opportunities.
Archaea co-founder and chief executive officer Nicholas Stork said: “We are on a mission to transform the role of RNG in empowering organizations to decarbonize and achieve their sustainability goals.
“In Aria, we found an irreplicable asset base and a team who shares our vision to harness the power of RNG and help both landfill owners/operators and investment-grade buyers of RNG meet their sustainability targets.
“The new capital raised will accelerate the combined Company’s growth and solidify its leadership in the industry.”
Among the other renewable fuels, the combined company’s LFG-to-RNG conversion is said to incur low cost, more predictable, and better for the environment.
Once the transaction is closed, the combined company will have more than $350m of cash on the balance sheet, which is adequate to fund its development projects.
The transaction is expected to be completed in the third quarter of 2021.
Archaea Energy co-founder and chief financial officer Brian McCarthy said: “Archaea’s expanding customer base, the growing demand for RNG and our team’s experience and ability to produce and deliver pipeline-quality RNG through the existing natural gas infrastructure will drive our growth.
“The already demonstrated institutional investor confidence in our vision for Archaea Energy will also enable us to deliver a low-risk development program with two-thirds of our RNG production under long-term, fixed-price arrangements with investment-grade buyers.”
