Delek US-Alon USA Deal Goes From Rumor to Reality

BRENTWOOD, Tenn. — Less than a month after talk began swirling throughout the industry that Delek US Holdings Inc. and Alon USA Energy were discussing a deal, Delek US revealed it will acquire roughly 48 percent of the Alon USA shares from its parent company, Alon Israel Oil Co. Ltd.

According to the definitive stock purchase agreement with Alon Israel, Delek US will acquire approximately 33.7 million shares of Alon USA Energy common stock owned by Alon Israel.

The approximate value of the transaction consideration is $572.4 million based upon a closing price of $37.90 per share of Delek US common stock on April 14. The transaction is expected to close in May, subject to customary governmental and other third-party approvals.

"We are excited about this opportunity to invest in Alon USA as it broadens our asset diversity while offering future growth opportunities," said Uzi Yemin, chairman, president and CEO of Delek US. "We would like to thank Alon Israel's management team for their support and efforts in this transaction, and we look forward to working with Alon USA's board of directors and management team to create further value together in the future."

Prior to beginning negotiations with Alon Israel, Delek US entered into a stockholder agreement with Alon USA. During the first year following the closing of this transaction, the agreement allows Delek US to acquire up to 49.99 percent of the outstanding shares of Alon USA at its discretion, with additional ownership above this threshold subject to approval of Alon USA's board of directors. 

The stockholder agreement will expire on the first anniversary of the closing of this transaction and Delek US will then have no further restrictions on ownership in Alon USA.

The consideration to be paid by Delek US to acquire the Alon USA common stock will consist of the issuance of 6 million shares of restricted Delek US common stock to Alon Israel, an unsecured $145-million promissory note payable to Alon Israel maturing in January 2021, and $200 million of cash that will be funded with a combination of cash on hand and borrowings on new or existing credit facilities. 

An additional 200,000 shares of Delek US common stock may be issued to Alon Israel under certain circumstances as outlined in the agreement. 

Bank of America, Merrill Lynch and Barclays acted as financial advisors to Delek US in connection with this transaction.

Brentwood-based Delek US is a diversified downstream energy company with assets in petroleum refining, logistics and convenience store retailing. The retail segment consists of a network of approximately 365 company-operated convenience stores operated under the MAPCO Express, MAPCO Mart, East Coast, Fast Food and Fuel, Favorite Markets, Delta Express and Discount Food Mart banners.

Dallas-based Alon USA is the largest 7-Eleven licensee in the United States.