Shareholders of US independent refiners Western Refining Inc. and Tesoro Corp. have approved Tesoro’s previously announced plan to acquire Western in a deal valued at more than $6 billion (OGJ Online, Nov. 17, 2016).

The proposed merger, which was approved by both companies at special stockholders’ meetings on Mar. 24, remains on schedule to close during this year’s first half, pending satisfaction or waiver of customary closing conditions, Tesoro and Western said.

Shareholder approvals follow a late-2016 agreement between the companies under which Tesoro agreed to purchase Western at an implied current price of $37.30/share in a stock transaction that, based on Tesoro’s Nov. 16 closing stock price of $85.74/share, represents an equity value of $4.1 billion and an enterprise value of $6.4 billion, including Tesoro’s assumption of Western’s $1.7 billion net debt and the $605-million market value of its noncontrolling interest in Western Refining Logistics LP.

Should the merger be completed, Tesoro will acquire the following assets from Western:

• A total of 254,000 b/sd (241,300 b/d) in refining combined refining capacity from Western’s three refineries, which include the 131,000-b/sd (124,450-b/cd) El Paso, Tex., refinery; the 25,000 b/sd (23,750 b/cd) refinery near Gallup, NM; and the 98,000-b/sd (93,100-b/cd) St. Paul Park refinery.

• Access to price-advantaged crude feedstock in the Permian, San Juan, and Bakken basins as well as the Western Canadian Sedimentary Basin.

• Access to a fully integrated crude pipeline system that serves western refineries and third parties, including a 17% interest in the 465,000-b/d Minnesota pipeline, the primary supply route for western Canadian and North Dakota crude to the St. Paul Park refinery.

• Refined product storage and distribution pipelines to retail and wholesale customers.

• About 545 retail outlets in Arizona, Colorado, New Mexico, Texas, Minnesota, and Wisconsin.

• Interest in Western Refining Logistics.

Following the merger, Tesoro would own ten refineries with a combined refining capacity of more than 1.1 million b/sd (1.05 million b/cd), as well as combined retail operations of more than 3,000 branded retail outlets operating under a variety of brands that, in addition to Tesoro-branded stations, will include ARCO, Shell, Exxon, Mobil, SuperAmerica, and Giant.

The proposed transaction follows recent consolidation moves by both independent refiners, including Tesoro’s acquisition of Dakota Prairie Refining LLC, the former MDU Resources-Calumet Specialty Products Partners LP joint venture that operated a 20,000-b/d diesel refinery near Dickinson, ND, and Western’s takeover of Northern Tier Energy LP’s high-conversion refinery at St. Paul Park, Minn. (OGJ Online, June 28, 2016; June 24, 2016).

Contact Robert Brelsford at

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