Tesoro Corporation (Tesoro) and Western Refining, Inc. (Western) have announced that Tesoro has completed its acquisition of Western for a total consideration of approximately US$5.8 billion. The strategic combination of the two companies brings together refining, marketing and logistics businesses that form a powerful, integrated value chain with significant marketing and logistics growth opportunities in key areas in the US. Tesoro and Western first announced Tesoro's expected acquisition of Western on 17 November 2016. The company remains committed to achieving the initially announced expected EPS accretion of 10% to 13% in 2018, the first full year of operations of the combined company.
Tesoro will change its name to Andeavor and Tesoro Logistics LP will change its name to Andeavor Logistics on 1 August 2017.
"We are excited about the continued transformation of Tesoro and our acquisition of Western represents another significant milestone in our journey," said Greg Goff, Chairman and CEO. "Acquiring the business at an attractive price relative to its intrinsic value and the delivery of synergies positions us well to create significant shareholder value. We are well prepared and will immediately move forward with the integration of our companies and capturing synergies. We have evaluated ideas and opportunities to capture synergies over the last few months and are very confident in our ability to achieve our target of US$350 – US$425 million in annual synergies."
Greg Goff will continue to serve as Chairman, President and Chief Executive Officer and Steven Sterin will continue to serve as Executive Vice President, Chief Financial Officer and President, Tesoro Logistics. In addition, Western's former Executive Chairman, Paul Foster, and Western's former Chief Executive Officer, Jeff Stevens, will soon join Tesoro's Board as directors. Tesoro's headquarters will remain in San Antonio, TX.
Tesoro is confident in delivering an expected US$350 – US$425 million in annual synergies with this run rate expected to be achieved by June 2019, the second year following the closing of the transaction. This includes approximately US$120 – US$160 million from value chain optimisation, US$130 – US$140 million from operational improvements and US$100 – US$125 million from corporate efficiencies. The table below provides some of the specific actions in each of these categories that are expected to drive synergy capture.
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