US independent refiners enter merger talks

Delek US Holdings Inc., Brentwood, Tenn., has made a formal offer to buy Alon Israel Oil Co. Ltd.’s US-based refining and marketing subsidiary Alon USA Energy Inc., Dallas, which owns and operates a 74,000-b/sd refinery in Krotz Springs, La., a 73,000 b/sd refinery at Big Spring, Tex., as well as an idled 70,000-b/sd, three-refinery complex in California.

Delek submitted a proposal to a special committee of Alon’s board of directors to acquire all outstanding shares of the company’s common stock not already owned by Delek in an all-stock transaction at a fixed exchange ratio of 0.44 shares of Delek common stock for each outstanding Alon share, Alon said.

Given the all-stock nature of the proposed transaction, Delek’s proposal would not be subject to any financing contingency should the deal move forward, Delek said in a filing to the US Securities and Exchange Commission.

The buyout offer follows Delek’s previous purchase of about 47-48% of Alon’s outstanding shares in 2015 (OGJ Online, Apr. 15, 2015).

Alon’s special committee is evaluating Delek’s proposal and will respond in due course, according to Alon.

The company, however, did not disclose a specific timeframe for when it would reach any decisions regarding the offer.

Delek said its offer to buy Alon supports the companies’ shared mission to optimize and grow stable cash flows from an integrated  portfolio of refining, logistics, and retail assets, enabling both companies to weather the current downturn in the industry and, as a combined company, emerge as a peer-leading enterprise in the refinery space for the long-term.

Contact Robert Brelsford at rbrelsford@ogjonline.com.

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