Boston, MA 09/29/2014 (wallstreetpr) – Western Refining Logistics LP (NYSE:WNRL) signed an agreement to acquire Western Refining, Inc. (NYSE:WNR)’ southwest wholesale business. The total value for the acquisition was $360 million, which is in the form of cash and common partnership units of WNRL. The deal expects to close by October 15, 2014, according to the agreement.
Consolidation of wholesale business
The wholesale business includes fuel supply to third parties and Western Refining Logistics LP (NYSE:WNRL)’s retail customers that contribute total sales of ~79,000 barrels per day (bpd). The business also includes the expansion process of the crude oil trucking operations in the Permian and San Juan basins; and the distribution of lubricant product business.
In addition, both the companies plan to enter into ten years agreement for fuel supply and crude oil trucking operation for a certain volume after the closure of the deal.
Jeff Stevens, CEO of WNRL and WNR, said that the unit holder commits to deliver the growth trend in the distribution of crude oil. The acquisition process is a positive step to achieving profitable results of the wholesale business.
The business will provide a significant increase in EBITDA going forward and support in generating enough cash for WNR to strengthen its future growth opportunities. WNR expects that the southwest wholesale business will generate an EBITDA of ~$40 million in FY2015.
Conclusion
As of now, Western Refining Logistics LP (NYSE:WNRL) has ten years fee-based contracts that will provide stable and predictable cash flows. In addition, the wholesale business will further improve the assets position in the high growth regions like crude oil trucking and lubricant transports.
The terms of the transaction approved by the Board of Directors of both the companies and independent directors of the Conflicts Committee, who appointed Bracewell & Giuliani as legal and Evercore Partners as financial advisor. WNR, on the other end, appointed Vinson & Elkins LLP as it legal advisor.
