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Mergers & Acquisitions

Could Delek US Acquire Alon USA?

Israeli-owned companies with large U.S. c-store networks in negotiations for stock purchase

BRENTWOOD, Tenn. – In discussions that Delek US Holdings Inc. said are “ongoing,” the company is in negotiations to buy “some or all” of the shares of Alon USA stock owned by Alon Israel Oil Co. Ltd., the parent company of Alon USA Energy Inc., said a 21st Century Smoke/CSP Daily News Flash.

Delek US Alon USA Israel (CSP Daily News / Convenience Stores / Gas Stations)

Delek US spokesperson Keith Johnson told CSP Daily News that the company had no comment beyond the regulatory filing with the U.S. Securities & Exchange Commission (SEC). Alon USA referred all inquiries to Delek US.

“In March 2015, Delek US Holdings Inc. requested approval from Alon USA Energy Inc. for purposes of Section 203 of the General Corporation Law of the State of Delaware with respect to the potential purchase [by Delek US Holdings] of some or all of the shares of common stock owned by Alon Israel Oil Co. Ltd,” the SEC filing said.

In response to Delek US’s request, the Alon USA board of directors formed a special committee of independent directors and authorized it to review, negotiate and evaluate Delek US’s request and make a recommendation to the Alon USA board.

The Alon USA committee and Delek US then negotiated the terms and conditions of a potential approval of the share deal.

And in connection with the possible acquisition by Delek US of the Alon Israel shares, Delek US and Alon USA entered into a confidential stockholder agreement establishing certain customary terms that would apply in the event of a purchase by Delek US of the Alon Israel shares.

The filing also said, “There can be no assurances that an agreement for [Delek US] to acquire Alon Israel shares will be reached or, if such an agreement is reached, that such a transaction will be consummated. If an agreement for the company to acquire the Alon Israel shares cannot be reached within a designated time as set forth in the agreement, Delek will again be subject to the restrictions on business combinations set forth in Section 203.”

Yakum, Israel-based Alon Israel, through its subsidiaries, engages in the businesses of energy and retail in the United States and Israel. Its energy businesses include refining and marketing petroleum products and supplying motor fuels and other petroleum products through a network of public retail outlets and more than 150 gas stations and convenience stores.

Dallas-based Alon USA Energy is an independent refiner and marketer of petroleum products, operating primarily in the south central, southwestern and western regions of the United States. Alon owns 100% of the general partner and approximately 82% of the limited partner interests in Alon USA Partners LP, which owns a crude oil refinery in Big Spring, Texas. It also directly owns crude oil refineries in Krotz Springs, La., and in Bakersfield, Calif. Alon USA Energy is the largest 7-Eleven licensee in the United States and operates approximately 300 convenience stores in central and west Texas and New Mexico. Alon Brands Inc. is the retail and branded marketing subsidiary of Alon USA Energy.

The Delek Group, based in Tel Aviv, is a leading integrated energy company that—along with exploration and production assets—owns and operates 250 gas stations and 190 convenience stores in Israel.

Delek US, Brentwood, Tenn., is a diversified downstream energy company with assets in petroleum refining, logistics and convenience-store retailing. The refining segment consists of refineries operated in Tyler, Texas, and El Dorado, Ark. Delek US Holdings and its affiliates own approximately 62% (including the 2% general partner interest) of Delek Logistics Partners LP, a master limited partnership (MLP) focused on owning and operating midstream energy infrastructure assets. The retail segment markets fuel and merchandise through a network of approximately 365 company-operated convenience stores operated under the MAPCO Express, MAPCO Mart, East Coast, Fast Food & Fuel, Favorite Markets, Delta Express and Discount Food Mart brand names.

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