Delek US Holdings to Acquire Remaining Outstanding Shares of Alon USA
Jan. 03, 2017
Delek US Holdings, Inc. (NYSE:DK) (“Delek US”) and Alon USA Energy, Inc. (NYSE:ALJ) (“Alon”) today announced a definitive agreement under which Delek US will acquire all of the outstanding shares of Alon common stock which Delek US does not already own in an all-stock transaction. Based on a closing price of $24.07 per share for Delek US common stock on Friday, December 30, 2016, the implied price for Alon common stock is $12.13 per share, or $464 million in equity value for the remaining shares. The enterprise value of this transaction to acquire the remaining 53 percent of Alon shares of common stock not already owned by Delek US is approximately $675 million including the proportionate assumption of $152 million of net debt related to this transaction and $59 million of market value for the non-controlling interest in Alon USA Partners, LP (NYSE:ALDW). This transaction was unanimously approved by the Special Committee of Alon’s board of directors and by the board of directors of Delek US. Additionally, the board of directors of Alon approved the transaction, excluding Delek employed directors which abstained from voting on this matter. The combination will create a company with a strong financial position and significant access to the Permian Basin.
The combined company will have a broad platform consisting of refining, logistics, retail, wholesale marketing, as well as renewables and asphalt operations. The refining system will have approximately 300,000 barrels per day of crude throughput capacity consisting of four locations and an integrated retail platform that includes 307 locations serving central and west Texas and New Mexico. Logistics operations include Delek Logistics which can benefit from future drop downs and organic projects to support a larger refining system. This combination will create a larger marketing operation with 600,000 barrels per month of space on the Colonial Pipeline System and a wholesale business with over 1.2 billion gallons of sales volume annually in the southwest.
Permian Focused Operations
The combined company will have a larger presence in the Permian Basin. Its refining system will have access to approximately 207,000 barrels per day of Permian sourced crude out of an approximately 300,000 barrel per day crude throughput system, which equates to 69 percent of the crude slate. This will result in the combined company being one of the largest buyers of Permian sourced crude among the independent refiners, creating opportunities to benefit from economies of scale in both refining and logistics. There will be a larger marketing presence with approximately 307 retail locations and wholesale marketing operations in the region that is integrated with the Big Spring, Texas refinery and extends Delek US’ marketing beyond its current west Texas position. From a logistics standpoint, the system will have access to crude oil pipelines, trucking and gathering operations in the area, which is in addition to Delek Logistics’ RIO joint venture crude oil pipeline in west Texas. This larger system also enhances the opportunities for Delek Logistics to expand its current participation in the highly attractive Permian and Delaware basins by supporting a larger operation.
Delek US Holdings, Inc. (NYSE:DK) (“Delek US”) and Alon USA Energy, Inc. (NYSE:ALJ) (“Alon”) today announced a definitive agreement under which Delek US will acquire all of the outstanding shares of Alon common stock which Delek US does not already own in an all-stock transaction. Based on a closing price of $24.07 per share for Delek US common stock on Friday, December 30, 2016, the implied price for Alon common stock is $12.13 per share, or $464 million in equity value for the remaining shares. The enterprise value of this transaction to acquire the remaining 53 percent of Alon shares of common stock not already owned by Delek US is approximately $675 million including the proportionate assumption of $152 million of net debt related to this transaction and $59 million of market value for the non-controlling interest in Alon USA Partners, LP (NYSE:ALDW). This transaction was unanimously approved by the Special Committee of Alon’s board of directors and by the board of directors of Delek US. Additionally, the board of directors of Alon approved the transaction, excluding Delek employed directors which abstained from voting on this matter. The combination will create a company with a strong financial position and significant access to the Permian Basin.
The combined company will have a broad platform consisting of refining, logistics, retail, wholesale marketing, as well as renewables and asphalt operations. The refining system will have approximately 300,000 barrels per day of crude throughput capacity consisting of four locations and an integrated retail platform that includes 307 locations serving central and west Texas and New Mexico. Logistics operations include Delek Logistics which can benefit from future drop downs and organic projects to support a larger refining system. This combination will create a larger marketing operation with 600,000 barrels per month of space on the Colonial Pipeline System and a wholesale business with over 1.2 billion gallons of sales volume annually in the southwest.
Alon owns the Krotz Springs Refinery and the Big Spring Refinery
Permian Focused Operations
The combined company will have a larger presence in the Permian Basin. Its refining system will have access to approximately 207,000 barrels per day of Permian sourced crude out of an approximately 300,000 barrel per day crude throughput system, which equates to 69 percent of the crude slate. This will result in the combined company being one of the largest buyers of Permian sourced crude among the independent refiners, creating opportunities to benefit from economies of scale in both refining and logistics. There will be a larger marketing presence with approximately 307 retail locations and wholesale marketing operations in the region that is integrated with the Big Spring, Texas refinery and extends Delek US’ marketing beyond its current west Texas position. From a logistics standpoint, the system will have access to crude oil pipelines, trucking and gathering operations in the area, which is in addition to Delek Logistics’ RIO joint venture crude oil pipeline in west Texas. This larger system also enhances the opportunities for Delek Logistics to expand its current participation in the highly attractive Permian and Delaware basins by supporting a larger operation.
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