Delek US Holdings (DK) Fully Acquires Alon USA Energy
Zacks Investment Research | Jul 02, 2017 10:43PM ET
Delek US Holdings, Inc. (NYSE:DK) announced that it has acquired the remaining outstanding shares of Alon USA Energy, Inc. Per the agreement, existing shareholders of Alon USA Energy will be compensated with 0.5040 Delek US share for each Alon share they hold, with cash paid instead of fractional shares.
Benefits of the Acquisition
In Apr, 2015, Delek US Holdings first announced its decision to acquire approximately 48% of Alon USA Energy, which accounted for about 33.7 million shares of the latter. The initial aim of this acquisition was to broaden the asset diversity of Delek US, while offering future growth opportunities. Post the closing of the 100% acquisition, Delek US will hold approximately 82 million shares outstanding of Alon USA.
With the completion of 100% of Alon, Delek will unlock an estimated EBITDA of $70–$85 million annually from the former’s asset through potential drop downs to Delek Logistics Partners LP (NYSE:DKL) in the future. The company expects that it will create a platform for future logistics projects, which will support a larger refining system.
The completion of the acquisition will give rise to a combined Permian-focused company with operations in all broad activities such as refining, logistics, retail and marketing altogether. It is expected to be highly accretive to Delek US’s earnings per share in 2018. In addition the combined company is expected to achieve annual synergies of $85 million to $105 million in 2018.
This will strengthen the presence of Delek US in the Permian Basin with an increased access to Permian sourced crude and will make the combined company one of the largest buyers of Permian sourced crude among independent refiners.
Current Refining Scenario in the U.S.
President Donald Trump plans to impose heavy tax on corporates that import goods in the U.S. With this step, he aims to encourage local manufacturing and domestic jobs. His decision is expected to affect many industries one of which is the Oil and Gas - Refining and Marketing industry. (Read more: Zacks Investment Research
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