FRANKLIN, Tenn. -- Delek US Holdings Inc. has signed an agreement with Abilene, Texas-based Pride Cos. LP and its affiliates to purchase a variety of assets related to its refining assets and marketing businesstwo refined petroleum product terminals located in Abilene and San Angelo, Texas; seven pipelines; and storage tanks with a total shell capacity of more than one million barrels.
Weexpect the transaction to improve the synergies between our refining and retail fuel and convenience store businesses by enhancing our ability to complete exchanges, [image-nocss] said Uzi Yemin, Delek US's president and CEO.
Delek will fund the cash purchase price of approximately $54.4 million (excluding inventory) from its cash and cash equivalents, including the net proceeds of its recent initial public offering. The consummation of the transaction, which the company expects will be accretive to its financial results, is subject to customary closing conditions and is expected to occur within 60 days.
In addition, the company has purchased Pride's marketing and distribution business, which along with other exchanges markets approximately 21,000 barrels per day (bpd) of refined products through its two owned terminals, the Aledo, Texas, terminal, and other terminals in Texas. Delek US will obtain Pride's rights under its existing supply contracts for up to 27,350 bpd.
The seven pipelines, of approximately 114 miles in length, also serve Dyess Air Force Base.
Included in the sale is idle oil refinery equipment near the Abilene terminal. The company plans to relocate some of the idled refinery equipment, which includes a crude oil unit, a vacuum unit, a Nash unit, and other refinery equipment, to its refinery in Tyler, Texas. Also, Delek will have a 10-year option to purchase the real estate on which the idle refinery equipment is located.
The announcement of this definitive purchase agreement further highlights both the opportunities we see to expand through strategic acquisitions and our ability to execute on these opportunities, added Yemin. The terminal operations in Abilene and San Angelo, in addition to generating immediate cash flow, will enable us to achieve a strategic goal of significantly expanding our wholesale refined petroleum products distribution business into new niche markets in west Texas, beyond our Tyler-area niche market in east Texas.
He concluded, Both today's announcement and the definitive agreement we announced last week to purchase 43 [Fast Petroleum] retail fuel and convenience stores reflect our ongoing implementation of the growth strategies we presented during our initial public offering in May. We intend to continue fulfilling those strategies through, among other things, the ongoing evaluation of additional opportunities for selective niche-market acquisitions of refineries, or complementary assets, as well as additional retail fuel and convenience store transactions within our existing geographic footprint and contiguous markets.
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