Andeavor acquiring Western Refining for US$1.5 billion
Friday, Aug 18, 2017
US pipeline operator Andeavor Logistics has agreed to buy Western Refining Logistics for US$1.5 billion as it expands its footprint in Texas and New Mexico.

The Texas-based company will acquire its rival via a definitive merger agreement, it said in a statement.

Unit holders in Western Refining will receive 0.5233 Andeavor units for each Western Refining unit, the firm added. Each Western Refining unit is valued at US$25.28.

“Andeavor Logistics is well positioned for sustainable growth through the execution of our organic growth programmes and strategic acquisitions, including drop-downs from Andeavor,” said Andeavor’s CEO, Greg Goff.

“The transactions announced today significantly improve the financial strength of Andeavor Logistics, reduce our cost of capital and clearly highlight the value of this growth business,” he added.

The transactions will strengthen Andeavor’s credit profile and position it for an investment grade credit rating, the firm said.

The deal gives the firm entry into the Permian Basin, and will enable it to capture further organic growth opportunities, the company added.

Texas-based Western Refining owns 705 miles (1,135 km) of crude pipelines and has around 12.4 million barrels of active storage capacity.

The El Paso-headquartered firm, which operates primarily in the Permian Basin in West Texas and southeast New Mexico, also distributes wholesale petroleum products and crude.

Andeavor is planning to spend at least US$500-600 million per year on organic growth and acquisition, the company said. It has a current two-year backlog of US$800-900 million of identified organic growth projects, the company added.

The merger is expected to close in the fourth quarter 2017, subject to required regulatory approvals, said Andeavor.

San Antonio-based Andeavor owns and operates a network of crude, refined product and gas pipelines. The firm operates mainly in the Mid-continent and Western US. It also owns and operates a number of crude and refined product truck terminals, marine terminals and storage facilities.

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