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Mergers & Acquisitions

Delek U.S. Becomes Largest U.S. 7-Eleven Licensee

Closes acquisition of Alon USA on July 1

BRENTWOOD, Tenn. -- Seven months after selling its 350-store chain to a Chilean petroleum and convenience-store company, Delek U.S. Holdings Inc. is back in the c-store retail game.

The Brentwood, Tenn.-based company has taken ownership of Alon USA, closing on the acquisition of the remaining outstanding shares of Alon USA Energy Inc. common stock in an all-stock transaction on July 1.

The owners of the remaining outstanding shares in Alon USA received a fixed exchange ratio of 0.5040 Delek U.S. shares for each share of Alon. Previously, Delek U.S. owned approximately 33.7 million shares or 47% of the common stock of Alon. Following the closing, Delek U.S. will have approximately 82 million shares outstanding.

On June 28, the stockholders of Alon USA approved all proposals related to the transaction. Delek U.S. stockholders approved the deal on June 29.

In November, Delek U.S. sold approximately 350 c-stores in Tennessee, Alabama, Georgia, Arkansas, Virginia, Kentucky and Mississippi under the Mapco Express, Mapco Mart, East Coast, Fast Food and Fuel, Favorite Markets, Delta Express and Discount Food Mart names to Santiago, Chile-based Compania de Petroleos de Chile COPEC SA (COPEC) for $535 million and Mapco’s estimated cash on hand and working capital adjustment, totaling approximately $16.3 million.

The convenience-store retail business Delek U.S. has acquired with Alon USA is the largest 7-Eleven licensee in the United States and operates approximately 300 c-stores that market motor fuels in Central and West Texas and New Mexico.

The new Delek U.S. is a diversified downstream energy company with assets in petroleum refining, renewable fuels, asphalt, logistics, wholesale marketing operations and convenience-store retailing.

The refining system consists of four locations and an integrated retail platform that includes approximately 300 locations serving Central and West Texas and New Mexico.

The refineries in Tyler and Big Spring, Texas; El Dorado, Ark.; and Krotz Springs, La.; have a combined crude throughput capacity of 302,000 barrels per day. Delek U.S. Holdings will own 100% of the general-partner and 81.6% of the limited-partner interest in Alon USA Partners LP, which owns a crude-oil refinery in Big Spring with a crude-oil throughput capacity of 73,000 barrels per day and an integrated wholesale marketing business.

Delek U.S. also owns approximately 63% (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. Delek Logistics will benefit from future dropdowns and organic projects to support a larger refining system.

The marketing operation supplies more than 350 wholesale locations, has unbranded wholesale sales of approximately 145,000 barrels per day of light products in 13 states and uses 450,000 barrels per month of space on the Colonial Pipeline system.

Delek U.S. will have a large presence in the Permian Basin in the U.S. Southwest, the combined company being one of the largest buyers of Permian-sourced crude among the independent refiners. 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 refinery.

“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,” said Uzi Yemin, chairman, president and CEO of Delek U.S. “The combined company will create a platform for future logistics projects to support a larger refining system.”

The combined company will primarily be led by Delek U.S.’s management team, headed by Yemin, with Fred Green as executive vice president and COO and Kevin Kremke as executive vice president and CFO. The special committee of Alon’s board nominated David Wiessman as a new director to be added to the Delek U.S. 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 general partner.

Within 30 days after the closing of the transaction, Delek U.S. will increase the size of its board of directors by one seat and appoint Wiessman. Delek Logistics’ general partner will increase the size of its board by one seat and appoint Haddock.

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