“This acquisition is an exciting strategic step for us as it broadens our asset diversity,” says CEO of Delek US.
Delek US Holdings Inc. has completed the acquisition of approximately 33.7 million shares, or approximately 48% of the outstanding shares, of Alon USA Energy Inc. common stock from Alon Israel Oil Co. Ltd.
“We are pleased to have completed this transaction quickly and would like to thank the management teams of both Alon Israel and Alon USA for their support during this process. In addition, through the backing of our lenders, we were able to finance this transaction in a timely manner,” said Uzi Yemin, chairman, president and CEO of Delek US. “This acquisition is an exciting strategic step for us as it broadens our asset diversity and we look forward to working with Alon USA’s Board of Directors and management team in the future.”
Five seats on the 11-member Alon USA board of directors previously held by Alon Israel representatives have been filled by representatives from Delek US. This includes Yemin, who has been named as the chairman of the Alon USA board.
Prior to commencing negotiations with Alon Israel, Delek US entered into a stockholder agreement with Alon USA. During the first year following the closing of this transaction, the stockholder agreement allows Delek US to acquire up to 49.99% of the outstanding shares of Alon USA at its discretion, with additional ownership above this threshold subject to the approval of the independent members of Alon USA’s board of directors. The stockholder agreement will expire on May 14, 2016, and Delek US will then have no further restrictions under this agreement related to increasing ownership in Alon USA.
Transaction Financing
The consideration paid by Delek US to acquire the Alon USA common stock consists of the issuance of 6.0 million shares of restricted Delek US common stock to Alon Israel; an unsecured $145.0 million promissory note with an interest rate of 5.5% payable to Alon Israel, which matures in January 2021; and $200.0 million of cash. Within two years of the closing of this transaction, an additional 200,000 shares of Delek US common stock may be issued to Alon Israel under certain circumstances as outlined in the stock purchase agreement with Alon Israel.
The cash payment was funded through a combination of cash on hand and an increase in Lion Oil’s term loan credit facility from $99.0 million to $275.0 million. The second amended and restated Lion Oil term loan facility, which closed on the same date as the acquisition of Alon USA common stock, has a five-year term and the interest rate is based, at Lion Oil’s election, on a LIBOR or base rate plus applicable margins, subject in each case to an all-in interest rate floor of 5.5%. Under the second amended and restated term loan facility, Fifth Third Bank is the administrative agent, lead collateral agent, a joint lead arranger and sole book runner, Bank Hapoalim B.M. is designated account collateral agent and a joint lead arranger, and Israel Discount Bank of New York is a joint lead arranger.
The approximate value of the transaction consideration is $564.5 million based upon a closing price of $36.59 per share of Delek US common stock on May 13, 2015.
Bank of America Merrill Lynch and Barclays acted as financial advisors to Delek US in connection with this transaction.
Delek US Holdings Inc. is a diversified downstream energy company with assets in petroleum refining, logistics and convenience store retailing. The retail segment markets fuel and merchandise through a network of approximately 360 company-operated convenience store locations operated under the MAPCO Express, MAPCO Mart, East Coast, Fast Food and Fuel, Favorite Markets, Delta Express and Discount Food Mart brand names.