HF Sinclair Corporation is acquiring Holly Energy Partners (HEP) by purchasing the remaining stake it does not own with a combination of the former’s common stock and cash, the two parties said in separate press releases.
HF Sinclair has entered into a definitive merger agreement to acquire all outstanding common units of HEP not owned by HF Sinclair or its affiliates in exchange for a combination of HF Sinclair common shares, par value 0 $.01 per share and cash, the company. said
The proposed transaction is expected to close in the fourth quarter of 2023, subject to the approval of HF Sinclair shareholders and HEP unitholders and the satisfaction of certain customary closing conditions, according to the press release . The deal is valued at $1.44 billion, according to a Reuters report.
HF Sinclair currently owns a 47% limited partner interest and a non-economic general partner interest in HEP, a primary limited company that provides transportation, storage and performance services for petroleum products and crude oil to the petroleum industry, including the subsidiaries of HF Sinclair.
The agreement provides for both stock and cash consideration in which each common unit holder would receive a combination of 0.315 shares of common stock and $4.00 in cash, without interest, for each public common unit. The consideration for the proposed transaction represents an approximate 2 percent premium to the closing price of HEP common units as of Aug. 15, according to the press release.
“We are pleased to announce this strategic transaction that we believe simplifies our corporate structure, reduces costs and further supports the integration and optimization of our portfolio,” said Tim Go, CEO and President of HF Sinclair. “We expect the transaction to be accretive to earnings per share and available free cash flow in the first twelve months, further supporting our capital allocation strategy of returning excess cash to shareholders.”
Once the transaction closes, HEP will be a wholly owned subsidiary of HF Sinclair and will cease to be a publicly traded partnership, according to the statement.
In a separate statement on Wednesday, HF Sinclair’s board has authorized a $1 billion share buyback program, which replaces all existing share buyback authorizations, of which approximately $5 million remained in the program previous $1 billion share buyback of the company authorized in September 2022.
Share repurchases under the program may be made in the open market or through privately negotiated transactions. Privately negotiated repurchases of REH Company are also authorized under this share repurchase program, subject to REH Company’s interests and other limitations. The timing and amount of share buybacks, including REH Company buybacks, will depend on market conditions and relevant corporate, tax, regulatory and other considerations, HF Sinclair said.
The REH Company, formerly known as The Sinclair Companies, was rebranded by the former following its acquisition by HF Sinclair in March 2022.
“We are pleased to announce the new $1 billion share repurchase program, which we believe demonstrates our ongoing commitment to return excess free cash flow to shareholders,” Go said.
Earlier this month, Dallas-based HF Sinclair Corporation reported second-quarter net income attributable to HF Sinclair shareholders of $507.7 million, or $2.62 per diluted share, a decrease up 58 percent from $1.22 billion, or $5.43 per diluted share, for the same quarter in 2022.
To contact the author, send an email to rteodoro.editor@outlook.com
