Tesoro Corp. (TSO) announced Thursday that the company has agreed to acquire fellow oil refiner Western Refining Inc. (WNR) in a stock transaction valued at $4.1 billion. Including the assumption of Western's outstanding debt of $1.7 billion and $605 million for a non-controlling interest in Western Refining Logistics L.P. (WNRL), the total value of the deal reaches $6.4 billion.
Western's closing share price Wednesday was $30.50, and the implied price that Tesoro will pay is $37.30 per share, a premium of more than 22%.
Western shareholders may choose to receive 0.435 shares of Tesoro stock for each share of Western stock they own, or $37.30 in cash per share of Western stock. Elections to receive cash will be subject to proration to the extent they exceed approximately 10.8 million shares (or approximately $404 million in the aggregate). Stock elections will not be subject to proration.
Tesoro CEO Greg Goff said:
The acquisition of Western further strengthens our integrated business model and extends our portfolio into attractive and growing markets. As a leading integrated refining, marketing and logistics company, this transformative acquisition drives value through a combination of access to advantaged crude oil, a strong, multi-brand marketing and convenience store portfolio and a robust platform for logistics growth, all of which will allow us to continue to create shareholder value.
The combined company will own 10 refineries in eight states with a refining capacity of 1.1 million barrels a day. The company will also own more than 3,000 retail stations under brand names such as Arco, Shell, Exxon and Tesoro.
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