Tesoro to Become a 3,000-Plus-Station Operation

SAN ANTONIO — Tesoro Corp. and Western Refining Inc. finalized a definitive agreement for Tesoro to acquire Western Refining for $4.1 billion. The transaction was unanimously approved by the boards of directors for both companies.

The total deal is valued at $6.4 billion and includes the assumption of approximately $1.7 billion of Western Refining's net debt and the $605-million market value of non-controlling interest in Western Refining Logistics LP.

Under the terms of the agreement, Western Refining shareholders can elect to receive 0.4350 shares of Tesoro for each share of Western stock they own, or $37.30 in cash per share of Western stock.

Once completed, the acquisition will give Tesoro refineries in Texas, New Mexico and Minnesota, in addition to its existing refineries in California, Washington, Alaska, Utah, and North Dakota. The combined company will have a refining capacity of more than 1.1 million barrels per day, and create a leading multi-brand marketing and convenience store portfolio in growing geographies with more than 3,000 combined branded retail sites.

"The acquisition of Western further strengthens our integrated business model and extends our portfolio into attractive and growing markets," said Greg Goff, chairman and CEO of Tesoro. "As a leading integrated refining, marketing and logistics company, this transformative acquisition drives value through a combination of access to advantaged crude oil; a strong, multi-brand marketing and convenience store portfolio; and a robust platform for logistics growth, all of which will allow us to continue to create shareholder value."

Tesoro's increased scale and diversity will enable the company to leverage and enhance in-house technical capabilities, which it expects to result in cost efficiencies, the ability to drive more growth, and increased productivity, Goff added.

"This strategic combination provides our shareholders with the opportunity to participate in the tremendous future growth prospects and synergies of the combined company," added Paul Foster, executive chairman of Western Refining.

"Joining forces with Tesoro, a company that shares our integrated business model strategy, will enable us to further leverage our capabilities in refining, marketing and logistics operations, and allow our talented team to work on a growing number of exciting opportunities," he continued. "We have tremendous respect for the Tesoro team and are excited to be a part of a larger and more diverse organization to support our continued growth."

San Antonio-based Tesoro is an independent refiner and marketer of petroleum products. Through its subsidiaries, it currently operates seven refineries in the western United States and has ownership in a logistics business, which includes an interest in Tesoro Logistics LP, and ownership of its general partner. Tesoro's retail-marketing system includes more than 2,400 retail stations under the ARCO, Shell, Exxon, Mobil, USA Gasoline, Rebel and Tesoro brands.

El Paso-based Western Refining is an independent refining and marketing company that operates refineries in El Paso and Gallup, New Mexico and St. Paul Park, Minnesota. The company's retail operations includes retail service stations and convenience stores in Arizona, Colorado, Minnesota, New Mexico, Texas, and Wisconsin, operating primarily under the Giant, Howdy's and SuperAmerica brands. It also owns the general partner and approximately 53 percent of the limited partnership interest of Western Refining Logistics.

This summer, Western Refining merged with Northern Tier Energy LP (NTI). Western Refining had already owned 38 percent of NTI common shares and 100 percent of the general partnership in the master limited partnership, as CSNews Online previously reported.

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