The acquisition is expected to offer a strong platform for earnings growth and cash flow generation for Tesoro.
Tesoro chairman and CEO Greg Goff said: "The acquisition of Western further strengthens our integrated business model and extends our portfolio into attractive and growing markets.
"As a leading integrated refining, marketing and logistics company, this transformative acquisition drives value through a combination of access to advantaged crude oil, a strong, multi-brand marketing and convenience store portfolio and a robust platform for logistics growth, all of which will allow us to continue to create shareholder value."
The deal is expected to improve the integrated refining, marketing and logistics operations of both companies.
Following the completion of the acquisition, the company will have ten refineries, a refining capacity of over 1.1 million barrels per day.
Western Refining executive chairman Paul Foster said: “Joining forces with Tesoro, a company that shares our integrated business model strategy, will enable us to further leverage our capabilities in refining, marketing and logistics operations and allow our talented team to work on a growing number of exciting opportunities.”
The combined retail operations will include more than 3,000 branded retail stations operating under a variety of brands including ARCO, Shell, Exxon, Mobil, SuperAmerica, Giant and Tesoro.
The transaction is subject to customary closing conditions, including approval by the shareholders of both companies and the receipt of regulatory approval.
It is expected to be completed in the first half of 2017.
In September, Tesoro agreed to acquire renewable fuels and chemicals company Virent, as part of its renewable fuels strategy.
Image: Tesoro's Anacortes Refinery at the north end of March Point, southeast of Anacortes, Washington. Photo courtesy of Walter Siegmund/Wikipedia.
