Delek US Puts Alon USA Acquisition in the Books

BRENTWOOD, Tenn. — It's official: Delek US Holdings Inc. has taken full ownership of Alon USA Energy Inc.

The deal, which saw Delek US acquire all the remaining outstanding shares of Alon common stock in an all-stock transaction, closed July 1.

Prior to this transaction, Delek US owned approximately 33.7 million shares, or 47 percent, of the common stock of Alon. Following closing, Delek US will have approximately 82 million shares outstanding.

"With the transaction now complete, I want to welcome the Alon employees, and we look forward to integrating Alon's operations into Delek," said Uzi Yemin, chairman, president and CEO of Delek US. "We will be focused on working together to grow the combined organization and achieve meaningful synergies across the business."

According to Yemin, the combined refining operation is one of the largest buyers of crude from the Permian Basin among the independent refiners. 

In addition, it has the ability to unlock additional value with an estimated $70 million to $85 million of annual logistics EBITDA from Alon's assets through future potential drop downs to Delek Logistics Partners. 

"We believe this strategic combination creates 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," Yemin said.

"Our strong financial position, combined with the ability to achieve $85 million to $105 million of expected synergies and unlock logistics value, should allow our capital allocation program to include initiatives to improve operations, take advantage of growth opportunities and return cash to shareholders, as we work to drive long-term value creation for our shareholders," he added.

The acquisition also gives Delek US new holdings in the convenience channel. Alon is the largest 7-Eleven licensee in the United States and operates approximately 300 convenience stores that also market motor fuels in Central and West Texas and New Mexico.

In all, the combined Brentwood-based company will have a broad platform consisting of:

• A refining system with approximately 300,000 barrels per day of crude throughput capacity consisting of four locations and an integrated retail platform that includes approximately 300 locations serving central and west Texas and New Mexico. 
• Logistics operations including Delek Logistics, which can benefit from future drop downs and organic projects to support a larger refining system. 
• A marketing operation that supplies more than 350 wholesale locations, has unbranded wholesale sales of approximately 145,000 barrels per day of light products in 13 states, and has utilization of 450,000 barrels per month of space on the Colonial Pipeline System. 
• An integrated asphalt business consisting of operations primarily in Texas, Arkansas, Oklahoma, California and Washington approaching 1 million tons of sales on an annual basis. 
• A biodiesel/renewable diesel assets, with a total capacity of approximately 61 million gallons per year, will include biodiesel plants in Cleburne, Texas and Crossett, Arkansas, and a renewable diesel and jet fuel plant in California.

EXECUTIVE TEAM

The combined company will primarily be led by Delek US’ management team, with Yemin serving as chairman, president and CEO; Fred Green as executive vice president and chief operating officer; and Kevin Kremke as executive vice president and chief financial officer. 

The special committee of Alon’s board of directors nominated David Wiessman as a new director to be added to the Delek US board and Ron Haddock as a new director to be added to the board of Delek Logistics GP LLC, which is Delek Logistics Partners LP’s general partner. 

As outlined in the merger agreement, within 30 days after the closing of the transaction, Delek US will increase the size of its board by one seat and appoint Wiessman to such newly created seat. In addition, the board of Delek Logistics’ general partner will increase the size of its board of directors by one seat and appoint Haddock to such newly created seat.