Delek US Holdings, Inc. (NYSE:DK) (“Delek US”) today announced the
closing of the acquisition of the remaining outstanding shares of
Alon USA Energy, Inc. (NYSE:ALJ) (“Alon”) common stock in an
all-stock transaction. The close of this transaction will be
effective at 12:02 a.m. Eastern Time on July 1, 2017. Under terms
of the agreement, the owners of the remaining outstanding shares in
Alon will receive a fixed exchange ratio of 0.5040 Delek US shares
for each share of Alon, with cash paid in lieu of fractional
shares. Prior to this transaction, Delek US owned
approximately 33.7 million shares, or 47 percent, of the common
stock of Alon. Following closing, Delek US will have approximately
82.0 million shares outstanding.
Uzi Yemin, Chairman, President and Chief
Executive Officer of Delek US, stated, “With the transaction now
complete, I want to welcome the Alon employees, and we look forward
to integrating Alon’s operations into Delek. We will be focused on
working together to grow the combined organization and achieve
meaningful synergies across the business. The combined refining
operation will be one of the largest buyers of crude from the
Permian Basin among the independent refiners. We also will have the
ability to unlock additional value with an estimated $70 million to
$85 million of annual logistics EBITDA from Alon’s assets through
future potential drop downs to Delek Logistics Partners. The
combined company will create a platform for future logistics
projects to support a larger refining system.”
Yemin continued, “We believe this strategic
combination creates a larger, more diverse company that is well
positioned to take advantage of opportunities in the market and
better navigate the cyclical nature of our business. Our strong
financial position, combined with the ability to achieve $85
million to $105 million of expected synergies and unlock logistics
value, should allow our capital allocation program to include
initiatives to improve operations, take advantage of growth
opportunities and return cash to shareholders, as we work to drive
long-term value creation for our shareholders.”
The combined company will primarily be led by
Delek US’ management team, with Uzi Yemin serving as Chairman,
President and Chief Executive Officer, Fred Green as Executive Vice
President and Chief Operating Officer and Kevin Kremke as Executive
Vice President and Chief Financial Officer. The Special Committee
of Alon’s board of directors nominated David Wiessman as a new
director to be added to the Delek US board and Ron Haddock as a new
director to be added to the board of Delek Logistics GP, LLC, which
is Delek Logistics Partners, LP’s (NYSE:DKL) (“Delek Logistics”)
general partner. As outlined in the merger agreement, within
30 days after the closing of the transaction, Delek US will
increase the size of its board of directors by one seat and appoint
Mr. Wiessman to such newly created seat. In addition, the board of
directors of Delek Logistics’ general partner will increase the
size of its board of directors by one seat and appoint Mr. Haddock
to such newly created seat.
Combined Operations
OverviewFollowing the close on July 1, the combined
company will have a broad platform consisting of refining,
logistics, retail and 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 approximately 300
locations serving central and west Texas and New Mexico.
- Logistics operations will include Delek Logistics, which can
benefit from future drop downs and organic projects to support a
larger refining system.
- The marketing operation will supply over 350 wholesale
locations, have unbranded wholesale sales of approximately 145,000
barrels per day of light products in 13 states, and have
utilization of 450,000 barrels per month of space on the Colonial
Pipeline System.
- The company will have an integrated asphalt business consisting
of operations primarily in Texas, Arkansas, Oklahoma, California
and Washington approaching 1.0 million tons of sales on an annual
basis. This operation is supported through a combination of
production and supply/exchange volume with 14 asphalt terminals in
the operation.
- The biodiesel/renewable diesel assets, with a total capacity of
approximately 61.0 million gallons per year, will include biodiesel
plants in Cleburne, Texas and Crossett, Arkansas, and a renewable
diesel and jet fuel plant in California.
Delek US will have a large presence in the
Permian Basin. Its refining system will initially 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 approximately 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. As a result of this combination, there will be a
larger marketing presence with retail locations and wholesale
marketing operations in the region that are integrated with the Big
Spring, Texas refinery. From a logistics standpoint, the system
will have access to crude oil pipelines, trucking and gathering
operations in the area, 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 Basin by
supporting a larger operation.
About Delek US Holdings, Inc.
Following the close of this transaction on July 1, 2017, Delek US
Holdings, Inc. will be a diversified downstream energy company with
assets in petroleum refining, logistics, asphalt, renewable fuels
and convenience store retailing. The refining assets will
consist of refineries operated in Tyler and Big Spring, Texas, El
Dorado, Arkansas and Krotz Springs, Louisiana with a combined
nameplate crude throughput capacity of 302,000 barrels per day.
Delek US Holdings will own 100 percent of the general partner and
81.6 percent of the limited partner interest in Alon USA Partners,
LP (NYSE:ALDW), which owns a crude oil refinery in Big Spring,
Texas, with a crude oil throughput capacity of 73,000 barrels per
day and an integrated wholesale marketing business.
The logistics operations primarily consist of
Delek Logistics Partners, LP. Delek US Holdings, Inc. and its
affiliates also own approximately 63 percent (including the 2
percent general partner interest) of Delek Logistics Partners,
LP. Delek Logistics Partners, LP (NYSE:DKL) is a
growth-oriented master limited partnership focused on owning and
operating midstream energy infrastructure assets.
The asphalt operations will consist of owned or
operated asphalt terminals serving markets from Tennessee to the
west coast through a combination of non-blended asphalt purchased
from third parties and produced at the Big Spring, Texas and El
Dorado, Arkansas refineries. The renewables operations will consist
of plants in Texas and Arkansas that produce biodiesel fuel and a
renewable diesel facility in California.
The convenience store retail business is the
largest 7-Eleven licensee in the United States and operates
approximately 300 convenience stores which also market motor fuels
in central and west Texas and New Mexico.
Safe Harbor Provisions Regarding
Forward-Looking StatementsThis press release contains
forward-looking statements that are based upon current expectations
and involve a number of risks and uncertainties. Statements
concerning current estimates, expectations and projections about
future results, performance, prospects, opportunities, plans,
actions and events and other statements, concerns, or matters that
are not historical facts are “forward-looking statements,” as that
term is defined under the federal securities laws. These
forward-looking statements include, but are not limited to,
statements regarding the integration of the combined companies
following the Alon transaction, transition plans, synergies,
opportunities, anticipated future performance and financial
position, and other factors.
Investors are cautioned that the following
important factors, among others, may affect these forward-looking
statements. These factors include but are not limited to: risks and
uncertainties related to the ability to successfully integrate the
businesses of Delek US and Alon, risks related to disruption of
management time from ongoing business operations due to the
integration implementation, the risk that any announcements
relating to the integration could have adverse effects on the
market price of Delek US' common stock, the risk that the
transaction could have an adverse effect on the ability of Delek US
and Alon to retain customers and retain and hire key personnel and
maintain relationships with their suppliers and customers and on
their operating results and businesses generally, the risk that
problems may arise in successfully integrating the businesses of
the companies, which may result in the combined company not
operating as effectively and efficiently as expected, the risk that
the combined company may be unable to achieve cost-cutting
synergies or it may take longer than expected to achieve those
synergies, uncertainty related to timing and amount of future share
repurchases and dividend payments, risks and uncertainties
with respect to the quantities and costs of crude oil we are able
to obtain and the price of the refined petroleum products we
ultimately sell; gains and losses from derivative instruments;
management's ability to execute its strategy of growth through
acquisitions and the transactional risks associated with
acquisitions and dispositions; acquired assets may suffer a
diminishment in fair value as a result of which we may need to
record a write-down or impairment in carrying value of the asset;
changes in the scope, costs, and/or timing of capital and
maintenance projects; operating hazards inherent in transporting,
storing and processing crude oil and intermediate and finished
petroleum products; our competitive position and the effects of
competition; the projected growth of the industries in which we
operate; general economic and business conditions affecting the
southern United States; and other risks described in Delek US’
filings with the United States Securities and Exchange Commission
(the “SEC”), including the Form S-4 (Registration Statement No.
333-216298) filed by Delek Holdco, Inc., which was declared
effective by the SEC on May 26, 2017.
Forward-looking statements should not be read as
a guarantee of future performance or results and will not be
accurate indications of the times at or by which such performance
or results will be achieved. Forward-looking information is
based on information available at the time and/or management's good
faith belief with respect to future events, and is subject to risks
and uncertainties that could cause actual performance or results to
differ materially from those expressed in the statements.
Delek US undertakes no obligation to update or revise any such
forward-looking statements, except as required by applicable law or
regulation.
Delek US Investor / Media Relations Contact:
Keith Johnson
Delek US Holdings, Inc.
Vice President of Investor Relations
615-435-1366
Alon (NYSE:ALJ)
Historical Stock Chart
From Mar 2024 to Apr 2024
Alon (NYSE:ALJ)
Historical Stock Chart
From Apr 2023 to Apr 2024