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Mergers & Acquisitions

Delek US Stocks Up on Alon USA

Share boost “broadens asset diversity”; restrictions will expire after one year

BRENTWOOD, Tenn. – Following rumors that Delek US Holdings Inc. might acquire Alon USA, Delek US Holdings has announced that it has entered into a definitive stock purchase agreement with Alon Israel Oil Co. Ltd. to acquire approximately 33.7 million shares, or approximately 48% of the outstanding shares, of Alon USA Energy Inc. common stock owned by Alon Israel.

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

“We are excited about this opportunity to invest in Alon USA as it broadens our asset diversity while offering future growth opportunities. We would like to thank Alon Israel's management team for their support and efforts in this transaction, and we look forward to working with Alon USA’s board of directors and management team to create further value together in the future,” said Uzi Yemin, chairman, president and CEO of Delek US.

Prior to commencing negotiations with Alon Israel, Delek US entered into a stockholder agreement with Alon USA. During the first year following the closing of this transaction, the agreement allows Delek US to acquire up to 49.99% of the outstanding shares of Alon USA at its discretion, with additional ownership above this threshold subject to approval of Alon USA’s board of directors. The stockholder agreement will expire on the first anniversary of the closing of this transaction, and Delek US will then have no further restrictions on ownership in Alon USA.

The consideration to be paid by Delek US to acquire the Alon USA common stock will consist of the issuance of 6.0 million shares of restricted Delek US common stock to Alon Israel, an unsecured $145.0 million promissory note payable to Alon Israel maturing in January 2021 and $200 million of cash that will be funded with a combination of cash on hand and borrowings on new or existing credit facilities. An additional 200,000 shares of Delek US common stock may be issued to Alon Israel under certain circumstances as outlined in the agreement. The approximate value of the transaction consideration is $572.4 million based upon a closing price of $37.90 per share of Delek US common stock on April 14, 2015.

The companies said that they expect the transaction to close in the second half of May, subject to customary governmental and other third-party approvals.

Dallas-based Alon USA Energy, a unit of Yakum, Israel-based Alon Israel, 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.

Brentwood, Tenn.-based Delek US Holdings is a unit of Netanya, Israel-based The Delek Group. It 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 growth-oriented 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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