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Western Refining and Northern Tier merger

Published by , Editorial Assistant
Hydrocarbon Engineering,


Western Refining (WNR), and Northern Tier Energy LP (NTI) have jointly announced that they have entered into a merger agreement whereby Western will acquire all of NTI’s outstanding common units not already owned by Western.

Under the terms of the merger agreement, NTI unitholders will receive US$15 in cash and 0.2986 of a share of WNR common stock for each NTI common unit held. Using the WNR 20 day volume weighted average price as of 23 October 2015 (the last trading day before WNR made its initial offer to acquire all of NTI’s outstanding common units) results in an implied consideration of US$28.34 for each NTI unit. This represents an 18% premium to the 20 day volume weighted average price of NTI’s common unit price as of 23 October 2015.

WNR intends to fund the cash portion of the merger consideration with a combination of cash on hand and debt financing. Assuming completion of the proposed transaction, NTI will become a wholly owned subsidiary of WNR and NTI common units will cease to be publicly traded. NTI’s 7.125% senior secured notes due 2020 and revolving credit facility are expected to remain in place.

Jeff Stevens, President and CEO of WNR said, “The merger of Western and NTI will result in the combined entity owning three of the most profitable independent refineries on a gross margin per barrel basis, with direct pipeline access to advantaged crude oil combined with an integrated retail and wholesale distribution network. With a simplified corporate structure and diverse geographic base, Western will have greater access to capital and be positioned to profitably grow the company. We are excited to move forward with this transaction and continue to maximise opportunities to deliver shareholder value.”

Dave Lamp, President and CEO of Northern Tier, added, “The variable distribution MLP model has not been rewarded by the equity market, as evidenced by the historical disconnect between NTI’s high yield and low unit price. With a simplified corporate structure and diverse geographic base, the new Western will be well positioned to unlock additional value for shareholders.”

The terms of the merger agreement were approved by the WNR board of directors and the conflicts committee of the board of directors (CCoBoD) of NTI’s general partner, which negotiated the terms on behalf of NTI. The CCoBoD of NTI’s general partner is comprised solely of independent directors who retained independent financial and legal advisors in connection with their evaluation of the merger.


Adapted from press release byFrancesca Brindle

Read the article online at: https://www.hydrocarbonengineering.com/product-news/22122015/northern-tier-to-merge-with-western-refining-2035/

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