Mergers & Acquisitions

Delek U.S. Completes Mapco Sale to COPEC

Deal better positions refiner/marketer to move ahead on Alon USA acquisition

SANTIAGO, Chile, and BRENTWOOD, Tenn. -- Delek U.S. Holdings Inc. has closed the transaction to sell its retail-related assets to Santiago, Chile-based Compania de Petroleos de Chile COPEC SA (COPEC), including Mapco Express Inc. and related companies, for $535 million and Mapco’s estimated cash on hand and working capital adjustment, totaling approximately $16.3 million.

The deal, announced in August, was completed through COPEC’s United States subsidiary, Copec Inc. COPEC is part of Chilean holding company Empresas Copec S.A. The Mapco deal marks the company’s first foray into the United States, a market that represents one of the great challenges in COPEC’s history, said Lorenzo Gazmuri, general manager of COPEC, per AmericaEconomia.

Mapco has 348 corporate-owned convenience stores operating primarily in Tennessee, Alabama and Georgia, with additional presence in Arkansas, Virginia, Kentucky and Mississippi. It operates company stores under the banners Mapco Express, Mapco Mart, East Coast, Fast Food and Fuel, Favorite Markets, Delta Express and Discount Food Mart. It also provides fuel to 142 dealer locations and provides logistical fuel transportation to Mapco and third parties.

COPEC has built a new headquarters for Mapco employees in Brentwood, Tenn. A majority of Mapco’s retail operations team is making the move to the new office, while those more involved in accounting and strategy, including Executive Vice President of Retail Tony Miller, will remain with Delek U.S., according to sources.

At closing, $156 million of debt associated with Mapco was repaid, along with a debt prepayment fee of $13.4 million and an estimated $4.6 million of transaction related costs. Net cash proceeds before taxes related to this transaction are $377.3 million. The estimated income tax payment related to this transaction will occur in early 2017.

“With the completion of this transaction, we have unlocked the value of our retail assets and improved our financial flexibility,” said Uzi Yemin, chairman, president and CEO of Delek. “We have gained a partner in retail fuel sales and will continue to supply certain locations under an 18-month fuel-supply agreement. By continuing to utilize our wholesale business and our space on the Colonial Pipeline system to serve these retail locations as we have in the past, our consolidated RINs position should not be significantly changed by this transaction. This financial flexibility can be used as we evaluate strategic opportunities to create long term value for our shareholders.”

Brentwood, Tenn.-based Delek is a diversified downstream energy company with assets in petroleum refining and logistics. The refining segment consists of refineries operated in Tyler, Texas, and El Dorado, Ark. Delek US Holdings and its affiliates also 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. Delek also owns approximately 47% of the outstanding common stock of Alon USA Energy Inc.

The sale comes as Delek is looking to acquire Alon USA Energy Inc. by purchasing all of the remaining shares of its fellow refiner-marketer that it doesn’t already own.

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