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EL PASO, Texas and TEMPE, Ariz. — Western Refining Inc. on Monday submitted a non-binding proposal to acquire Northern Tier Energy LP for $2.56 billion.
If the merger is consummated, Western Refining’s retail division of approximately 230 convenience stores and gas stations in Arizona, Colorado, New Mexico and Texas under the GIANT, Mustang, Sundial and Howdy’s brand names would join forces with Northern Tier’s retail operation, which operates approximately 165 c-stores and supports 99 franchised locations primarily in Minnesota and Wisconsin under the SuperAmerica LLC trademark.
If approved, the transaction calls for Northern Tier Energy unit holders to receive $17.50 in cash and 0.2266 of a share of Western Refining common stock for every unit held.
“We believe this proposed transaction enhances value for both the Western shareholders and [Northern Tier] unit holders,” said Western Refining President and CEO Jeff Stevens. “The combination of Western and Northern Tier will simplify our corporate structure and create a stronger, more diverse company with enhanced growth opportunities and greater access to capital.”
El Paso-based Western Refining already owns 38 percent of master limited partnership Northern Tier’s common units and 100 percent of the general partnership interest in Northern Tier.
Western Refining intends to fund the cash portion of the proposed merger via a combination of cash on-hand, capital markets debt or a bank-sponsored bridge loan.
The proposed transaction is subject to the negotiation and execution of mutually acceptable definitive documentation and approval by Western’s board of directors, Northern Tier’s Conflicts Committee and the common unit holders of Northern Tier.
In addition to its SuperAmerica retail network and a bakery and commissary operating under the SuperMom’s brand, Tempe-based Northern Tier is a downstream energy company with retail and logistics operations. It also operates a 97,800 barrel-per-day refinery in St. Paul Park, Minn.
Western Refining and Northern Tier Energy are expected to discuss this proposed merger in more detail when both report 2015 fiscal third-quarter earnings on Nov. 3.