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Delek US $DK to Acquire Remaining 53% Stake in Alon USA $ALJ for $464M

Delek US $DK to Acquire Remaining 53% Stake in Alon USA $ALJ for $464M

Delek US currently owns approximately 33.7 million shares of common stock of Alon, which it agreed to acquire in April 2015, as reported by ExitHub. In July 2016, Alon USA retained J.P. Morgan as its financial advisor, and Gibson Dunn as its legal advisor, to explore an exit for the company. Based on a closing price of $24.07 per share for Delek US common stock on Friday, December 30, 2016, the implied price for the Alon common stock is $12.13 per share. The owners of the remaining outstanding shares in Alon that Delek US does not currently own will receive a fixed exchange ratio of 0.5040 Delek US shares for each share of Alon. This represents a 5.6 percent premium to the 20 trading day volume weighted average ratio through and including December 30, 2016, of 0.477. Upon closing, the combined company will be primarily led by Delek US’ management team. The combined company will have a broad platform consisting of refining, logistics, retail, wholesale marketing, as well as renewables and asphalt operations. The refining system will have approximately 300,000 barrels per day of crude throughput capacity consisting of four locations and an integrated retail platform that includes 307 locations serving central and west Texas and New Mexico. Logistics operations include Delek Logistics which can benefit from future drop downs and organic projects to support a larger refining system. This combination will create a larger marketing operation with 600,000 barrels per month of space on the Colonial Pipeline System and a wholesale business with over 1.2 billion gallons of sales volume annually in the southwest. Alon USA Energy, headquartered in Dallas, Texas, is an independent refiner and marketer of petroleum products, operating primarily in the South Central, Southwestern and Western regions of the United States. Alon owns 100% of the general partner and 81.6% of the limited partner interests in Alon USA Partners, LP (NYSE: ALDW), which owns a 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. In addition, Alon directly owns a crude oil refinery in Krotz Springs, Louisiana, with a crude oil throughput capacity of 74,000 barrels per day. Alon also owns crude oil refineries in California, which have not processed crude oil since 2012. Alon owns a majority interest in a renewable fuels project in California, with a throughput capacity of 2,500 barrels per day. Alon is a leading marketer of asphalt, which it distributes primarily through asphalt terminals located predominately in the Southwestern and Western United States. Alon is the largest 7-Eleven licensee in the United States and operates approximately 300 convenience stores which also market motor fuels in Central and West Texas and New Mexico. Delek US Holdings is a diversified downstream energy company with assets in petroleum refining and logistics. The refining segment consists of refineries operated in Tyler, Texas and El Dorado, Arkansas with a combined nameplate production capacity of 155,000 barrels per day. Delek US Holdings, Inc. and its affiliates also own approximately 62 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. Delek US Holdings, Inc. currently owns approximately 47 percent of the outstanding common stock of Alon USA Energy, Inc. (NYSE: ALJ). “We are excited to reach this agreement and believe this strategic combination will result in a larger, more diverse company that is well positioned to take advantage of opportunities in the market and better navigate the cyclical nature of our business,” said Uzi Yemin, Chairman, President and Chief Executive Officer of Delek US. “We expect to be able to achieve meaningful synergies across the organization and the combination will create a refining system that will be one of the largest buyers of crude from the Permian Basin among the independent refiners. Additionally, we expect the combined company will have the ability to unlock logistics value from Alon’s assets through future potential drop downs to Delek Logistics Partners and create a platform for future logistics projects to support a larger refining system,” he added. “We are excited to be joining Delek US and believe this agreement represents an excellent opportunity for Alon’s shareholders,” said David Wiessman, Chairman of Alon’s Special Committee. “The economies of scale, financial strength, and synergies generated through this merger create the opportunity to drive long-term value for shareholders and the all-stock transaction allows all shareholders to participate in the future performance of the combined company. I would like to thank Alon’s employees for their efforts, and our customers, suppliers and banks that supported our company, as we worked together to create value for our shareholders.” Wiessman is Chairman of Alon USA Partners. He is also Executive Chairman of Blue Square-Israel Ltd. (NYSE/TASE: BSI); and Executive Chairman and President of Dor Alon Energy Israel (1988) Ltd., which operates a chain of convenience stores and fuel supply in Israel and is listed on the Tel Aviv Stock Exchange. In 1994, Wiessman became Chief Executive Officer, President, and a Director of Alon Israel. Wiessman has also served as President and Chief Executive Officer of Alon from its formation in 2000 until May 2005, and as Executive Chairman from July 2000 to May 2015. In April this year, Alon Group, which is owned by Shraga Biran, David Wiessman, and a group of kibbutzim, was said to be considering an IPO on the Tel Aviv Stock Exchange as part of a 1.9 billion shekel debt settlement. Alon Group has experienced “a sweeping downward financial spiral at almost every level of its holdings pyramid in recent years (Alon Holdings Blue Square – Israel Ltd. (NYSE: BSI; TASE: BSI), the Mega retail chain), and has itself required a 2.2 billion shekel debt settlement,” said Globes. Most of the blame for the mess at Israel’s Mega supermarkets, which has been struggling with $360 million in debt, and has been in trouble for years, “goes to former CEO David Wiessman,” said Haaretz. However, in 2005 he was named “Israel’s Man of the Year.” In 1976, after serving in the Israeli Air Force, Wiessman became CEO and majority shareholder in Bielsol Group, a privately owned company that owns and operates gasoline stations and real estate in Israel. The transaction is expected to close in the first half of 2017 and is subject to customary closing conditions, including regulatory approval and approval by a majority of votes cast of Delek US shareholders and approval by the holders of a majority of the remaining 53 percent of Alon shares, which excludes the 47 percent of Alon shares owned by Delek US. Tudor, Pickering, Holt & Co. is serving as exclusive financial advisor on this transaction to Delek US. BofAMerrill Lynch and Barclays provided financial structuring advice to Delek US related to this transaction. Norton Rose Fulbright US LLP and Morris, Nichols Arsht & Tunnell LLP are serving as legal advisors for Delek US. J.P. Morgan is serving as exclusive financial advisor and Gibson Dunn & Crutcher LLP is serving as legal advisor for the Special Committee of Alon USA’s board of directors. Vinson & Elkins LLP is serving as legal advisor to Alon USA.]]>