Delek US Buying Back Shares From Activist Investor
BRENTWOOD, Tenn. — Delek US Holdings Inc. has purchased $64 million worth of its shares from well-known investor Carl C. Icahn and the Icahn Group. Delek bought the shares at a purchase price of $18.30 per share, which was the closing price of the company's common shares on March 4, the last trading day prior to the execution of the agreement.
Under the agreement, the Icahn Group will, among other things, withdraw its nomination of directors and agree to a standstill restriction through the completion of the company's 2023 annual meeting of stockholders, including refraining from acquiring additional shares of the company's common stock.
Icahn Enterprises LP encouraged Delek in a 2021 letter to sell its c-store business. That was followed by an attempt by CVR Energy to gain Delek board of director seats.
"CVR acquired a 15-percent stake in Delek last year, initially stating that it wanted to acquire Delek. Most recently, CVR launched a proxy contest to replace Delek directors with three longstanding friends and former colleagues of CVR CEO David Lamp," Delek said in a 2021 statement.
In March 2021, Delek encouraged shareholders to vote for its board of director nominees. In May of that same year, shareholders voted to elect all Delek-backed nominees — Uzi Yemin, William J. Finnerty, Richard J. Marcogliese, Gary M. Sullivan Jr., Vicky Sutil, Laurie Tolson, David Wiessman and Shlomo Zohar — to the company's board of directors. All Delek director nominees received approximately 90 percent or more of the voted shares, excluding those of CVR Energy, Delek noted in a statement.
On Feb. 1 of this year, IEP Energy Holding LLC, a company controlled by Carl Icahn, called for the election of three candidates to the Delek US board of directors at the company's upcoming 2022 annual meeting of stockholders. However, the new agreement regarding Delek's share repurchase from Icahn Group renders this effort moot.
Delek will utilize cash on hand to fund the share repurchase. The transaction is expected to close no later than March 11, subject to customary closing conditions, after which the Icahn Group is expected to own approximately 3.48 million common shares of Delek, which represents almost 5 percent of the company's outstanding shares.
"The combination of a strong cash balance and a robust refining margin environment provide us with flexibility to effectuate this transaction," said Yemin, Delek US' CEO and president. "This share repurchase reflects our confidence in the underlying business and reduces our shares outstanding by approximately 4.7 percent. Moving forward, we will continue to focus on running our system safely and reliably in an effort to capture the full benefits that this strong macro environment offers."
Brentwood-based Delek US Holdings Inc. is a diversified downstream energy company with assets in petroleum refining, logistics, asphalt, renewable fuels and convenience store retailing. The convenience store business operates approximately 250 stores in central and west Texas and New Mexico.