Delek US Holdings to Acquire Remaining 18.4 Percent of Outstanding Units of Alon USA Partners

Source Press Release
Company Delek US Holdings 
Tags Corporate Deals, Deals, Refining & Marketing Activities, Refinery Project
Date November 08, 2017
  • All-stock transaction at a fixed exchange ratio of 0.49 Delek US shares for each Alon USA Partners common unit 

  • Transaction simplifies the corporate structure of Delek US

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.

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."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.

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 Timing

The 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.

Advisors

Barclays 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 Alon USA Partners

Alon 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.

Source: EvaluateEnergy® ©2018 EvaluateEnergy Ltd