Delek US Holdings Inc., Brentwood, Tenn., has completed its purchase of Alon Israel Oil Co. Ltd.’s US-based refining and marketing subsidiary Alon USA Energy Inc., Dallas, which owns and operates a 74,000-b/sd refinery in Krotz Springs, La.; an idled 70,000-b/sd, three-refinery complex in California; and through its majority interest in Alon USA Partners LP, a 73,000 b/sd refinery at Big Spring, Tex. (OGJ Online, Jan. 3, 2017).
As part of the all-stock transaction, which closed on July 1, Delek acquired the remaining 53% of Alon USA’s common stock not already owned by Delek at a fixed exchange ratio of 0.5040 of a share of Delek common stock for each outstanding Alon share, the companies said.
The combined company will be led primarily by Delek US’ existing management team, with Uzi Yemin serving as chairman, president, and chief executive officer; Fred Green as executive vice-president and chief operating officer; and Kevin Kremke as executive vice-president and chief financial officer.
Additionally, within 30 days of the completed merger, Alon’s David Wiessman and Ron Haddock each will be added, respectively, as a director to newly created seats on the boards of Delek US and Delek Logistics GP LLC.
Intended to form a larger, more diverse company positioned to take advantage of market opportunities and better navigate the cyclical nature of the petroleum business, the merger enables the combined company to unlock logistics value from Alon’s assets through future potential drop downs to Delek Logistics Partners LP, as well as create a platform for future logistics projects to support a larger refining system, Yemin said.
The completed merger follows Delek’s buyout offer to Alon USA in late 2016 as part of a plan to support the companies’ shared mission to optimize and grow stable cash flows from an integrated portfolio of refining, logistics, and retail assets to become a peer-leading enterprise in the refinery space for the long-term (OGJ Online, Oct. 21, 2016).
Operations overview
In addition to Alon USA’s Krotz Springs and Big Spring refineries, Delek US’s new refining system includes its previously held 75,000-b/sd refinery in Tyler, Tex., and 80,000-b/sd refinery in El Dorado, Ark., that now have access to about 207,000-b/d of Permian basin crude to satisfy 69% of feedstock requirements for the new system’s more than 300,000-b/sd overall crude throughput capacity.
Alongside expanded retail, renewables, asphalt operations, the merger results in expanded access for the combined refining system to enable expanded distribution and marketing of finished products, including 450,000 bbl/month of space on Colonial pipeline.
Now one of the largest buyers of Permian-sourced crude among the independent refiners, the combined company has expanded access to crude oil pipelines, trucking, and gathering operations in the area—including Delek Logistics’s RIO joint-venture crude pipeline in west Texas—to further support Delek Logistics’s ability to expand its current operations in the Permian basin, according to Delek US.
Contact Robert Brelsford at [email protected].
