Under the terms of the deal, Delek US will acquire the remaining 53% stake in Alon to strength its business in Texas's prolific Permian basin.
The combined company, with an enterprise value of about $2.8bn, is expected to have a strong financial position and significant access to the Permian Basin.
Additionally, the combined company will have refining system with access to approximately 207,000 barrels per day of Permian crude, making it one of the largest buyers of crude from the Permian Basin.
Delek US president, chairman and CEO Uzi Yemin: “We are excited to reach this agreement and believe this strategic combination will result in a larger, more diverse company that is well positioned to take advantage of opportunities in the market and better navigate the cyclical nature of our business.
“Additionally, we expect the combined company will have the ability to unlock logistics value from Alon’s assets through future potential drop downs to Delek Logistics Partners and create a platform for future logistics projects to support a larger refining system.”
Upon completion of the deal, the Delek US’ management team will lead the combined company.
Alon Special Committee chairman David Wiessman said: “The economies of scale, financial strength, and synergies generated through this merger create the opportunity to drive long-term value for shareholders and the all-stock transaction allows all shareholders to participate in the future performance of the combined company.”
Scheduled to be closed in the first half of 2017, the transaction is subject to customary closing conditions, including regulatory approval.
