Delek US Holdings, Inc. (NYSE:DK) (“Delek US”) and Alon USA
Partners, LP (NYSE: ALDW) (“Alon Partners”) today announced the
execution of a definitive merger agreement under which Delek US
will acquire all of the outstanding Alon Partners common units
representing limited partner interests which Delek US or its
affiliates do not already own, in an all-stock for common units
merger transaction.
Delek US and its affiliates currently own
approximately 51.0 million common units of Alon Partners, or
approximately 81.6 percent of the outstanding units. Under terms of
the merger agreement, the owners of the outstanding common units in
Alon Partners that Delek US and its affiliates do not currently own
will receive a fixed exchange ratio of 0.49 Delek US shares for
each common unit of Alon Partners. This implies a 5.0 percent
premium to the 30 trading day volume weighted average ratio through
and including November 7, 2017, of 0.4666 and a 2.9 percent premium
to the ratio on November 7, 2017, which was the day before the
parties announced this transaction.
Uzi Yemin, Chairman, President and Chief
Executive Officer of Delek US stated, “This was one of our
strategic initiatives following the acquisition of Alon USA on July
1, 2017. It should allow us to simplify our corporate structure,
reduce public company costs, reallocate cash flow from
distributions to growth investments and enable us to efficiently
dropdown logistics assets to Delek Logistics Partners in the
future. In addition, we should be able to move forward to capture
cost of capital synergies as we utilize the balance sheet of Delek
US to refinance high cost debt at Alon Partners. For Alon Partners
public unitholders, the transaction gives them ownership in a
larger more diverse organization with increased daily trading
volume through Delek US shares. I would like to thank the employees
of both companies and the members of Alon Partners’ conflicts
committee for their hard work during this process.”
The merger terms were negotiated, reviewed and
approved by the conflicts committee of the board of directors of
the general partner of Alon Partners. The conflicts committee,
which comprises independent members of the board of directors of
Alon Partners’ general partner, has unanimously approved the
merger, the merger agreement and the related transaction. As part
of its evaluation process, the conflicts committee retained
independent legal and financial advisors. The transaction was also
approved by the board of directors of Delek US and, upon the
recommendation of the conflicts committee, the board of directors
of Alon Partners’ general partner.
Approvals and TimingThe
transaction is expected to close in the first quarter of 2018. The
approval and adoption of the merger agreement and the merger by
Alon Partners requires approval by a majority of the outstanding
Alon Partners common units. A subsidiary of Delek US, which owns a
sufficient number of Alon Partners common units to approve the
merger on behalf of all Alon Partners public unitholders, has
executed a support agreement in which it has irrevocably agreed to
consent to the merger. The closing of the merger is subject to
customary closing conditions, including effectiveness of a
registration statement on Form S-4 related to the issuance of new
Delek US shares to the Alon Partners’ public unitholders and the
listing of such shares on the NYSE. No vote of Delek US
stockholders is required.
AdvisorsBarclays is serving as
exclusive financial advisor and Baker Botts L.L.P. and Morris
Nichols, Arsht & Tunnell LLP are serving as legal advisors on
this transaction for Delek US. Houlihan Lokey is serving as
exclusive financial advisor and Gardere Wynne Sewell LLP and Potter
Anderson & Corroon LLP are serving as legal advisors for the
conflicts committee of the board of directors of Alon Partners’
general partner.
About Delek US Holdings,
Inc.Delek US Holdings, Inc. is a diversified downstream
energy company with assets in petroleum refining, logistics,
asphalt, renewable fuels and convenience store retailing. The
refining assets consist of refineries operated in Tyler and Big
Spring, Texas, El Dorado, Arkansas and Krotz Springs, Louisiana
with a combined nameplate crude throughput capacity of 302,000
barrels per day. Delek US Holdings, through its subsidiaries,
currently owns 100 percent of the general partner and approximately
81.6 percent of the limited partner interests in Alon Partners,
which owns the crude oil refinery in Big Spring, Texas, with a
crude oil throughput capacity of 73,000 barrels per day and an
integrated wholesale marketing business.
The logistics operations primarily consist of
Delek Logistics Partners, LP. Delek US Holdings, Inc. and its
affiliates also own approximately 63 percent (including the 2
percent general partner interest) of Delek Logistics Partners, LP.
Delek Logistics Partners, LP (NYSE:DKL) is a growth-oriented master
limited partnership focused on owning and operating midstream
energy infrastructure assets.
The asphalt operations consist of owned or
operated asphalt terminals serving markets from Tennessee to the
West Coast through a combination of non-blended asphalt purchased
from third parties and production at the Big Spring, Texas and El
Dorado, Arkansas refineries. The renewables operations consist of
plants in Texas and Arkansas that produce biodiesel fuel and a
renewable diesel facility in California.
The convenience store retail business is the
largest 7-Eleven licensee in the United States and operates
approximately 300 convenience stores in central and west Texas and
New Mexico.
About Alon USA PartnersAlon USA
Partners, LP is a Delaware limited partnership in which Delek US
Holdings, Inc. (NYSE:DK) currently owns 100 percent of the general
partner and approximately 81.6 percent of the limited partner
interests. Alon Partners owns and operates a crude oil refinery in
Big Spring, Texas, with a crude oil throughput capacity of 73,000
barrels per day. Alon Partners refines crude oil into finished
products, which are marketed primarily in Central and West Texas,
Oklahoma, New Mexico and Arizona through its integrated wholesale
distribution network to retail convenience stores owned by Delek US
and other third-party distributors.
Safe Harbor Provisions Regarding
Forward-Looking StatementsThis press release contains
forward-looking statements that are based upon current expectations
and involve a number of risks and uncertainties. Statements
concerning current estimates, expectations and projections about
future results, performance, prospects, opportunities, plans,
actions and events and other statements, concerns, or matters that
are not historical facts are “forward-looking statements,” as that
term is defined under the federal securities laws. These
forward-looking statements include, but are not limited to,
statements regarding the proposed merger with Alon Partners
including the timing, closing and success thereof; the ability of
Delek US to simplify its corporate structure, reduce costs,
reallocate cash flow, capture synergies including relating to costs
of capital, refinance debt, increased daily trading volume; future
dropdowns and the success thereof; continued safe and reliable
operations; integration and transition plans, synergies,
opportunities, anticipated future performance and financial
position, and other factors.
Investors are cautioned that the following
important factors, among others, may affect these forward-looking
statements. These factors include but are not limited to: risks and
uncertainties related to the expected timing and likelihood of
completion of the proposed merger, including the occurrence of any
event, change or other circumstances that could give rise to the
termination of the merger agreement, the risk that the parties may
not be able to satisfy the conditions to the proposed transaction
in a timely manner or at all, the risk that any announcements
relating to the proposed transaction could have adverse effects on
the market price of Delek US' common stock or Alon Partners' common
units, the risk that the proposed transaction and its announcement
could have an adverse effect on the ability of Delek US and Alon
Partners to retain customers and retain and hire key personnel and
maintain relationships with their suppliers and customers and on
their operating results and businesses generally, the risk that the
combined company may be unable to achieve cost-cutting synergies or
it may take longer than expected to achieve those synergies,
uncertainty related to timing and amount of future share
repurchases and dividend payments, risks and uncertainties with
respect to the quantities and costs of crude oil we are able to
obtain and the price of the refined petroleum products we
ultimately sell; gains and losses from derivative instruments;
management's ability to execute its strategy of growth through
acquisitions and the transactional risks associated with
acquisitions and dispositions; acquired assets may suffer a
diminishment in fair value as a result of which we may need to
record a write-down or impairment in carrying value of the asset;
changes in the scope, costs, and/or timing of capital and
maintenance projects; operating hazards inherent in transporting,
storing and processing crude oil and intermediate and finished
petroleum products; our competitive position and the effects of
competition; the projected growth of the industries in which we
operate; general economic and business conditions affecting the
southern United States; and other risks contained in Delek US’ and
Alon Partners’ filings with the United States Securities and
Exchange Commission.
Forward-looking statements should not be read as
a guarantee of future performance or results and will not be
accurate indications of the times at or by which such performance
or results will be achieved. Forward-looking information is
based on information available at the time and/or management's good
faith belief with respect to future events, and is subject to risks
and uncertainties that could cause actual performance or results to
differ materially from those expressed in the statements. Delek US
undertakes no obligation to update or revise any such
forward-looking statements, except as required by applicable law or
regulation.
No Offer or SolicitationThis communication
relates to a proposed business combination between Delek US and
Alon Partners. This press release does not constitute an offer to
sell or the solicitation of an offer to buy any securities or a
solicitation of any vote or approval. This announcement is for
informational purposes only and is neither an offer to purchase,
nor a solicitation of an offer to sell, any securities or the
solicitation of any vote in any jurisdiction pursuant to the
proposed transactions or otherwise, nor shall there be any sale,
issuance or transfer or securities in any jurisdiction in
contravention of applicable law. No offer of securities shall be
made except by means of a prospectus meeting the requirements of
Section 10 of the Securities Act of 1933, as amended.
Additional Information and Where to Find ItIn
connection with the proposed acquisition transaction, a
registration statement on Form S-4 will be filed with the SEC that
will include a consent statement of Alon Partners. Delek US and
Alon Partners also plan to file other relevant materials with the
SEC. UNITHOLDERS OF ALON PARTNERS ARE ENCOURAGED TO READ THE
REGISTRATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH
THE SEC, INCLUDING THE CONSENT STATEMENT/PROSPECTUS THAT WILL BE
PART OF THE REGISTRATION STATEMENT, BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. The final consent
statement/prospectus will be mailed to unitholders of Alon
Partners. Investors and security holders will be able to obtain the
documents, and any other documents that Delek US has filed with the
SEC, free of charge at the SEC's website, www.sec.gov. In addition,
documents filed with the SEC by Delek US or Alon Partners will be
available free of charge by (1) for Delek US filings, accessing
Delek US’ website at www.delekus.com under the "Investor Relations"
link and then under the heading "SEC Filings"; (2) for Alon
Partners filings, accessing Alon Partners’ website at
www.alonpartners.com under the heading ”SEC Filings”; (3) writing
Delek US at 7102 Commerce Way, Brentwood, TN 37027, Attention:
Investor Relations; or (4) writing Alon Partners at 7102 Commerce
Way, Brentwood, TN 37027, Attention: Investor Relations.
Participants in the SolicitationDelek US, Alon
Partners and their respective directors and executive officers may
be deemed to be participants in the solicitation of consents in
favor of the merger from the public unitholders of Alon Partners.
Additional information regarding the interests of those
participants and other persons who may be deemed participants in
the transaction may be obtained by reading the consent
statement/prospectus regarding the proposed merger when it becomes
available. Free copies of this document may be obtained as
described in the preceding paragraph.
Investor / Media Relations Contact:Keith
JohnsonDelek US Holdings, Inc.Vice President of Investor
Relations615-435-1366
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