Boston, MA 06/19/2014 (wallstreetpr) – Valero Energy Partners LP (NYSE:VLP) announced this week that it has approved the acquisition of certain assets from its former parent company, Valero Energy Corp. The total consideration of the purchase is $154 million and will be paid out from the available cash with the company. The purchase of the assets includes storage systems and pipelines of Valero Energy Corp’s McKee Crude System, Wynnewood Products System and Three Rivers Crude.
Implementing Growth Plans
The purchase of the assets are likely to conclude on July 1, 2014. According to the company’s Chairman and Chief Executive Officer, Joe Gorder, the purchase of the assets is the first step towards implementing the company’s growth plans and is in line with its earlier laid out growth strategies. In April, Valero Energy Partners LP (NYSE:VLP) had expressed its plans to acquire assets from Valero’s existing assets to move towards growth.
Valero Energy Partners split off during late last year in order to be publicly traded partnership and to raise cash and augment the stock performance of Valero. By the end of the year, the partnership accounted $375 million in cash garnered from its IPO. On closure of the purchases, Valero Energy Partners will reach an agreement with Valero for a 10-year transportation and terminaling agreements. The purchase of new assets will fetch the company around $15.4 million before other charges.
Barclays Raises Price Target
Following the announcement of the company of its first step towards growth trajectory, the research firm Barclays has raised its price target over the partnership company. Now, they have a price target of $48 and an ‘overweight’ company for the firm. The revision comes on the firm’s view that the acquisition of three assets will expand the footprint of the company.
The price target revision helped the shares of Valero Energy Partners LP (NYSE:VLP) to inch up by nearly 2% as they closed at $45 on the day.
