El Paso-based Western Refining acquired by Tesoro Corp. in a US$ 6.4 billion deal
Oil refiner Tesoro Corp. will buy Western Refining Inc. in a deal worth about US$ 6.4 billion. The transaction is scheduled to be finished in the first half of 2017.
Tesoro Corp. will acquire Western at an implied current price of US$ 37.30 per Western share in a stock transaction, representing an equity value of US$ 4.1 billion based on Tesoro’s closing stock price of US$ 85.74 on November 16, 2016. This represents an enterprise value of US$ 6.4 billion, including the assumption of approximately US$ 1.7 billion of Western’s net debt and the US$ 605 million market value of non-controlling interest in Western Refining Logistics, LP.
This transaction has been unanimously approved by the boards of directors of both companies, and is another transformative step forward for Tesoro and the Company’s ongoing commitment to creating significant value for shareholders, employees, communities and other key partners. The acquisition creates a premier, highly integrated and geographically diversified refining, marketing and logistics company and provides a strong platform for earnings growth and cash flow generation, the company informed.
“The acquisition of Western further strengthens our integrated business model and extends our portfolio into attractive and growing markets,” said Greg Goff, Chairman and CEO of Tesoro in press release. “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.”
“Also, our increased scale and diversity will enable us to leverage and enhance in-house technical capabilities, which we expect will result in cost efficiencies, the ability to drive more growth and increased productivity,” Goff continued.
After the merger, Tesoro will have 10 oil refineries in eight states with capacity to process 1.1 million barrels of oil a day — making it one of the major oil refiners in the U.S. It will operate just over 3,000 gas stations under a variety of brands, including ARCO, Shell, Exxon, Mobil, Tesoro, SuperAmerica, Giant and Howdy’s, and have sales of more than US$38 billion.
“This strategic combination provides our shareholders with the opportunity to participate in the tremendous future growth prospects and synergies of the combined company,” said Paul Foster, Executive Chairman of Western Refining. “Joining forces with Tesoro, a company that shares our integrated business model strategy, will enable us to further leverage our capabilities in refining, marketing and logistics operations and allow our talented team to work on a growing number of exciting opportunities. We have tremendous respect for the Tesoro team and are excited to be a part of a larger and more diverse organization to support our continued growth.”
Western refining has more than 7,000 workers and has operations in El Paso, Phoenix, New Mexico, and Minnesota.