Downstream Energy Firm Delek US Buys 48% Stake in Alon USA.
15 May 2015 - US-based downstream energy company Delek US Holdings, Inc. (NYSE: DK) has completed the acquisition of approximately 33.7 m shares, or approximately 48% of the outstanding shares, of Alon USA Energy, Inc. (NYSE: ALJ) common stock from Alon Israel Oil company, Ltd., the company.
Five seats on the eleven-member Alon USA board of directors previously held by Alon Israel representatives have been filled by representatives from Delek US.
This includes Delek US chairman, president and chief executive officer Uzi 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 14 May 2016, and Delek US will then have no further restrictions under this agreement related to increasing ownership in Alon USA.
The consideration paid by Delek US to acquire the Alon USA common stock consists of the issuance of 6.0m shares of restricted Delek US common stock to Alon Israel; an unsecured USD 145m promissory note with an interest rate of 5.5% payable to Alon Israel, which matures in January 2021; and USD 200m 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 USD 99.0m to USD 275m. The second amended and resaid 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%.
According to Dalek, the approximate value of the transaction consideration is USD 564.5m based upon a closing price of USD 36.59 per share of Delek US common stock on 13 May 2015.
Delek US Holdings, Inc. is a diversified downstream energy company with assets in petroleum refining, logistics and convenience store retailing.
Bank of America Merrill Lynch and Barclays acted as financial advisors to Delek US in connection with this transaction.
Sector: Petroleum/Natural Gas/Coal
Target: Alon USA Energy, Inc
Buyer: Delek US Holdings, Inc
Vendor: Alon Israel Oil company, Ltd
Deal size in USD: 564.5m
Buyer advisor: , ,