VARO Energy has reached agreement to acquire Preem through the purchase of 100% of the share capital of the parent company, Corral Petroleum Holdings, in an all-cash transaction. Subject to customary closing conditions and the receipt of regulatory approvals the transaction is expected to be completed in the second half of 2025.
The agreement follows a competitive M&A process that began after CPH announced a strategic review of its assets in late 2023. VARO has been engaged in this process for over 15 months, having entered exclusivity in August 2024. As part of this process and in accordance with its rights under existing security arrangements, Deutsche Bank (Suisse), as pledgee of the CPH shares, executed the sale agreement on behalf of CPH’s parent company, Moroncha Holdings.
Preem is one of the largest energy companies in Scandinavia. The company plays a critical role in the region’s energy security, providing over 40% of Sweden’s and around a quarter of Scandinavia’s energy needs for transportation. It serves customers in 17 countries across Europe.
Dev Sanyal, CEO of VARO, comments: ‘The acquisition of Preem is transformational for VARO. On completion, we will become Europe’s second largest renewable fuel producer with an extensive distribution and storage network across major European markets with conventional fuel production capacity of 530,000 barrels per day. Combined we will serve over 50,000 business customers across 33 countries, with our future growth underpinned by a robust portfolio of mature renewable fuel projects.’
An early mover in renewable fuel production, Preem has invested nearly $1 billion (€0.92 billion) since 2010 in the production of renewable fuels and initiatives aimed at reducing the carbon intensity throughout the value chain. As a result of these investments, Preem’s current renewable fuel production of 0.3 million tonnes per annum (mtpa) will rise to 1.3 mtpa with the Synsat diesel plant upgrade enabling up to 40% co-processing of renewable feedstocks. The company also has a material pipeline of other renewable fuel projects.
Marcel van Poecke, chairman of VARO and chairman of Energy at Carlyle, says: ‘This acquisition provides material value creation opportunities through disciplined investment in future growth projects, while enhancing VARO’s ability to deliver the reliable and secure energy that Europe needs. The combined entity will be well positioned to continue to play an important role in meeting Europe’s growing demand for sustainable energy for the mobility and industrial sectors.’
Preem owns two major fuel manufacturing facilities in Sweden, at Lysekil and Gothenburg. The two facilities have a combined capacity of 352,000 barrels per day, which equates to 80% of Sweden’s refining capacity, and the ability to co-process renewable feedstock. Primarily located in Scandinavia, Preem’s assets are highly complementary to VARO’s existing operations across northwest Europe with limited overlap.
The combined group will have a large geographic footprint across key European markets, with global feedstock sourcing capabilities and an expanded customer base. Benefiting from Preem’s manufacturing facilities and VARO’s Cressier and Bayernoil assets, our fuel manufacturing capacity will increase to 530 kbd. It will serve over 50,000 business customers in Europe and account for almost 10% of all road and marine fuels sold on the continent, with Sweden becoming its largest manufacturing base. The company will operate one of Europe’s largest supply networks in Europe with access to over 120 terminals.
Russell Hardy, supervisory board member of VARO and CEO at Vitol, says: ‘We are very excited by this transaction. The company will be Europe’s second largest producer of biofuels – which are key to decarbonising transport in Europe. It will benefit from access to Vitol’s network and global expertise. We greatly look forward to expanding this ongoing and successful partnership and working with the combined entity to meet customer requirements and supply evolving markets.’
The company will be the largest co-processor of renewable feedstocks in Europe. On completion, the combined group will rank in the top five largest producers of Hydrotreated Vegetable Oil (HVO) and Sustainable Aviation Fuel (SAF) globally. It will be Europe’s second largest renewable fuel producer and the top producer in Sweden.
Material renewable fuel production will provide the company with a strong position in the fast-growing biofuels for transport sector. Biofuel demand in the EU transport sector is expected to increase by 50-80% by 2030 as Member States accelerate decarbonization efforts.
With more than a decade of experience developing renewable fuel assets, Preem brings valuable expertise in applying proven technology at scale. When combined with cash flow growth, increased liquidity and a strong balance sheet, the combined group will have an enhanced capacity to invest in and develop its renewable fuel asset portfolio. In addition, material value upsides from combining the two businesses have been identified. These include leveraging the combined companies’ physical assets with VARO’s extensive value chain optimisation, risk and exposure management capabilities to deliver higher margins, improved crude mix and renewable feedstock optimisation.
Post completion the intention is to focus on three investment priorities. First, investing in improved security of supply and asset resilience, across manufacturing, distribution and storage. Second, decarbonizing and increasing the efficiency of conventional manufacturing assets. Third, investing in the attractive portfolio of biofuel projects of both companies, with a customer-centric approach designed to keep pace with evolving demand for sustainable energy.
