Mergers & Acquisitions

Deal Would Mean SuperAmerica Ownership Shift

Western Refining makes offer to acquire 100% of Northern Tier Energy

EL PASO, Texas -- In a deal that would bring the SuperAmerica convenience store chain under its complete control, Western Refining Inc. said that it has proposed to acquire all of the remaining publicly held shares of Northern Tier Energy LP, owner of SuperAmerica, for an estimated $2.52 billion.

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Tempe, Ariz.-based Northern Tier Energy is an independent downstream energy company with refining, retail and logistics operations that serves the PADD II region of the United States. It operates a refinery in St. Paul Park, Minn. And it operates approximately 165 convenience stores and supports approximately 99 franchised convenience stores, primarily in Minnesota and Wisconsin, under the SuperAmerica trademark, and a bakery and commissary under the SuperMom's brand.

Western Refining is an independent refining and marketing company based in El Paso, Texas. The refining segment operates refineries in El Paso, and Gallup, N.M. The retail segment includes 260 gas stations and convenience stores, as well as unmanned fleet fueling locations, in Arizona, Colorado, New Mexico and Texas. The retail segment includes the Giant, Mustang, Sundial and Howdy's brands.

It also owns the general partner and approximately 66% of the limited partnership interest in Western Refining Logistics LP and the general partner and limited partnership interest in Northern Tier.

In late 2013, in a deal mainly intended to expand its refinery presence, but which includes the downstream network, Western Refining acquired ACON Investments' (ACON) and TPG's ownership interests in Northern Tier for $775 million.

Western Refining now owns 100% of the general partner of NTI and owns approximately 38% of the outstanding common units of NTI.

As reported in a 21st Century Smoke/CSP Daily News Flash, assuming completion of the transaction, NTI will become a wholly owned subsidiary of Western Refining.

The proposed purchase price for each NTI common unit is $17.50 in cash and 0.2266 of a share of Western common stock. The proposed consideration represents a 15% premium to the 20-day volume weighted average price (VWAP) of NTI's common unit price as of Oct. 23, 2015, and represents aggregate consideration of $27.62 per NTI common unit based on the 20-day VWAPs for NTI and Western as of Oct. 23, 2015. NTI common units will cease to be publicly traded. NTI's 7.125% Senior Secured Notes due 2020 will remain outstanding.

The proposed transaction is subject to the negotiation and agreement, as well as approval by Western Refining's board of directors, NTI's conflicts committee and the common unitholders of NTI.

The companies said that there can be no assurance that they will execute any agreement, or that any transaction will be approved or consummated.

How the move would affect convenience-store operations at either company is still unclear, according to Gary Hanson, vice president of corporate communications for Western Refining. They presented the proposal to the Northern Tier conflicts committee and must await word, he said, adding that no timetable is in place for that process to conclude.

“It’s a pending proposal,” Hanson told CSP Daily News. “There’s not a lot of color we can add to it from either companies’ standpoint.”

In February 2014, executives from both companies discussed the possibility of combining and spinning off their respective gas station and convenience-store networks into a standalone company. Western Refining president and CEO Jeff Stevens said, "If there was an opportunity out there that made sense as a standalone, that's certainly something that we'll look at. … It's approaching that number now … based just by combining the two together."

But he added, "The retail business is important to us as it provides a secure outlet for our refinery production and helps with our RIN compliance." (The U.S. Environmental Protection Agency created the Renewable Identification Number [RIN] system was to facilitate compliance with the Renewable Fuel Standard [RFS]).

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