VARO Energy (VARO) has announced a transformative agreement to acquire Preem Holding AB and Preem AB (Preem), one of Scandinavia’s largest energy companies, in an all-cash transaction. Under the deal, VARO will purchase 100% of the share capital of Preem’s parent company, Corral Petroleum Holdings AB (CPH). The transaction, subject to customary closing conditions and regulatory approvals, is expected to be completed in the second half of 2025.
The acquisition follows a competitive mergers and acquisitions (M&A) process that began after CPH’s strategic review of its assets in late 2023. VARO has been engaged in this process for over 15 months, entering into exclusivity in August 2024. Deutsche Bank (Suisse) SA, as pledgee of the CPH shares, executed the sale agreement on behalf of CPH’s parent company, Moroncha Holdings Co. Ltd.
A Significant Step in European Energy Transition
Preem, headquartered in Sweden, is one of the largest and most influential energy companies in Scandinavia. The company plays a critical role in energy security for the region, supplying more than 40% of Sweden’s and approximately a quarter of Scandinavia’s energy needs for transportation. It operates across 17 countries in Europe, making it a key player in the European energy market.
Preem has been an early adopter of renewable fuel production, investing nearly $1 billion since 2010 to build its renewable fuel capacity. This has allowed the company to transition its production capabilities, which currently amount to 0.3 million tonnes per annum (mtpa) of renewable fuel, to a projected 1.3 mtpa. The upgrade of its Synsat diesel plant will enable the company to co-process up to 40% renewable feedstocks, further increasing its renewable production capabilities. Additionally, Preem has a strong pipeline of renewable fuel projects underway.
Strengthening VARO’s Position in Renewable Energy
Dev Sanyal, CEO of VARO, emphasized the transformational nature of the deal: “The acquisition of Preem is a game-changer for VARO. Upon completion, we will become Europe’s second-largest renewable fuel producer, with an extensive distribution and storage network across major European markets. With a conventional fuel production capacity of 530,000 barrels per day, the combined entity will serve over 50,000 business customers across 33 countries. Our future growth will be backed by a robust portfolio of renewable fuel projects.”
VARO is currently focused on the energy transition, with a portfolio that includes advanced biofuels, biogas, and e-mobility solutions. This acquisition will significantly expand VARO’s capacity to meet the growing demand for sustainable energy in the mobility and industrial sectors. The company will now hold two of Europe’s largest fuel manufacturing facilities, with combined refining capacity totaling 530,000 barrels per day. Sweden will become the largest manufacturing base for the new entity, which will operate one of Europe’s largest fuel supply networks with over 120 terminals.
Expansion into Biofuels and Sustainable Aviation Fuel (SAF)
With this acquisition, VARO will also become the largest co-processor of renewable feedstocks in Europe. The combined company will be among the top five largest producers of Hydrotreated Vegetable Oil (HVO) and Sustainable Aviation Fuel (SAF) globally. This position will allow VARO to play a central role in Europe’s biofuel market, which is expected to see demand grow by 50-80% by 2030 as the EU accelerates its decarbonization efforts.
Russell Hardy, Supervisory Board Member of VARO and CEO of Vitol, commented, “We are very excited by this transaction. The company will be Europe’s second-largest producer of biofuels, a critical sector in decarbonizing transport in Europe. The acquisition will provide access to Vitol’s global expertise and network, helping us meet evolving customer requirements and supply markets effectively.”
Synergies and Investment Priorities
The acquisition of Preem will create significant value by leveraging the complementary strengths of both companies. Preem’s manufacturing facilities, combined with VARO’s Cressier and Bayernoil assets, will significantly increase fuel production capacity. The new group will serve a broad customer base across Europe, with the ability to meet nearly 10% of the region’s road and marine fuel demand.
In addition to expanding its renewable fuel production, VARO and Preem plan to focus on three key investment priorities post-completion:
- Improved Security of Supply and Asset Resilience: Ensuring continued reliability and security across manufacturing, distribution, and storage networks.
- Decarbonizing and Increasing the Efficiency of Conventional Assets: Reducing the carbon intensity of existing manufacturing assets.
- Investing in Renewable Fuel Projects: Accelerating the development of biofuel projects to meet growing demand for sustainable energy solutions.
Continuing Commitment to Sustainability
Both VARO and Preem have made significant strides in their decarbonization efforts. Together, they have achieved a 16% reduction in CO2 emissions from their operations and have abated 5.5 million tons of CO2 annually for their customers. VARO remains committed to reducing the carbon intensity of its operations and supporting the EU’s energy transition goals.
VARO’s ambitious sustainability targets set in 2022 include tripling EBITDA by 2026, with 50% of that growth coming from sustainable energy sources. The acquisition of Preem places the company on track to meet these goals while continuing to invest in long-term energy security and decarbonization initiatives.
Long-Term Vision and Investment Strategy
Founded in 2012, VARO has built a strong track record of successfully acquiring and integrating companies in the energy sector. With the support of long-term investors Carlyle (66.66%) and Vitol (33.33%), VARO continues to play a pivotal role in Europe’s energy security and the transition to a low-carbon future.
With its new, larger portfolio, VARO is well-positioned for long-term growth, both in conventional and sustainable energy markets. The company’s enhanced cash flow generation, strong balance sheet, and robust renewable fuel asset portfolio will enable it to meet the evolving needs of its customers while contributing to Europe’s broader energy transition goals.
Preem’s Asset Portfolio
Preem’s portfolio includes two major fuel manufacturing complexes in Sweden: the Lysekil refinery, the largest in Scandinavia, with a capacity of 220,000 barrels per day, and the Gothenburg facility with a refining capacity of 132,000 barrels per day. Both facilities have significant renewable fuel production capabilities and have been co-processing renewable feedstocks for over a decade. Preem also operates extensive storage and retail operations, with around 500 fuel stations across Sweden.
About VARO Energy
VARO Energy, is a leading European energy company focused on supporting the energy transition while ensuring reliable energy supply. The company is committed to decarbonizing its operations and delivering sustainable energy solutions to its customers across Europe. With operations in 26 countries, VARO manufactures, blends, trades, and distributes both conventional and renewable energies.
This strategic acquisition positions VARO and Preem to lead the way in Europe’s renewable fuel and sustainable energy sectors, creating long-term value for shareholders, customers, and the environment.
Source VARO Energy