Delek US Holdings To Acquire Remaining 18.4% Stake In Alon USA Partners

Published: Nov 08 2017
Deal Summary

Delek US Holdings Inc., a downstream company, executed the definitive agreement to acquire the remaining 18.4% stake in Alon USA Partners LP, a downstream company. The transaction is estimated to be valued at approximately US$160.45 million (MM).

Under the terms, each Alon USA unit holder will receive 0.49 shares of Delek US for each unit held. This implies a 5% premium to the 30 trading day volume weighted average ratio through and including November 7, 2017, of 0.4666 and a 2.9% premium to the ratio on November 7, 2017.

Alon USA owns and operates a crude oil refinery in Big Spring, Texas, with a crude oil throughput capacity of 73,000 barrels per day.

Currently, Delek US owns approximately 51 MM units, representing 81.6% stake in Alon USA.

Barclays Plc is acting as financial advisor while Baker Botts L.L.P. and Morris Nichols, Arsht & Tunnell LLP (MNAT) are acting as legal advisors to Delek US in the transaction. Houlihan Lokey is acting as financial advisor while Gardere Wynne Sewell LLP and Potter Anderson & Corroon LLP are acting as legal advisors to the conflicts committee of board of directors of Alon Partners' general partner. The transaction will enable Delek US to strengthen its business operations.

The transaction is expected to be completed in the first quarter of 2018, subject to customary closing conditions, including effectiveness of a registration statement on Form S-4 related to the issuance of new Delek US shares to the Alon USA’s public unit holders and the listing of such shares on the NYSE.

Uzi Yemin, chairman, president and CEo of Delek US Holdings, said, "This was one of our strategic initiatives following the acquisition of Alon USA on July 1, 2017. It should allow us to simplify our corporate structure, reduce public company costs, reallocate cash flow from distributions to growth investments and enable us to efficiently dropdown logistics assets to Delek Logistics Partners in the future. In addition, we should be able to move forward to capture cost of capital synergies as we utilize the balance sheet of Delek US Holdings to refinance high cost debt at Alon Partners. For Alon USA public unit holders, the transaction gives them ownership in a larger more diverse organization with increased daily trading volume through Delek US Holdings shares. I would like to thank the employees of both companies and the members of Alon Partners' conflicts committee for their hard work during this process."

The transaction implies a value of US$11,945.35 per bbl of throughput capacity.

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