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SAN ANTONIO — Tesoro Corp. is looking to the future now that it has closed on its acquisition of Western Refining Inc. with an eye toward $350 million-plus in annual synergies.
The two companies officially became one on June 1 and the total considering of the deal was roughly $5.8 billion. The strategic combination of the two companies brings together refining, marketing and logistics businesses that form "a powerful, integrated value chain with significant marketing and logistics growth opportunities in key areas in the United States," according to Tesoro.
The acquisition behind it, Tesoro will change its name to Andeavor — and Tesoro Logistics LP will change its name to Andeavor Logistics — on Aug. 1, as CSNews Online previously reported.
"We are excited about the continued transformation of Tesoro and our acquisition of Western represents another significant milestone in our journey," said Greg Goff, Chairman and CEO. "Acquiring the business at an attractive price relative to its intrinsic value and the delivery of synergies positions us well to create significant shareholder value.
"We are well prepared and will immediately move forward with the integration of our companies and capturing synergies. We have evaluated ideas and opportunities to capture synergies over the last few months and are very confident in our ability to achieve our target of $350 to $425 million in annual synergies," he added.
According to Tesoro, it expects to deliver $350 to $425 million in annual synergies by June 2019, the second year following the closing of the transaction. This includes approximately $120 to $160 million from value chain optimization, $130 to $140 million from operational improvements and $100 to $125 million from corporate efficiencies.
It also expects to deliver $475 to $575 million in annual improvements in operating income in 2017.
As previously announced, Greg Goff will continue to serve as chairman, president and CEO and Steven Sterin will continue to serve as executive vice president, chief financial officer and president, Tesoro Logistics.
In addition, Western's former executive chairman, Paul Foster, and Western's former CEO, Jeff Stevens, will soon join Tesoro's board as directors. Tesoro Logistics elected Stevens to its board of directors.
Tesoro's headquarters will remain in San Antonio.
"Under the leadership of Paul Foster and Jeff Stevens, Western emerged as one of the nation's leading integrated refining, marketing and logistics companies," Goff said. "Their vast industry experience and proven managerial skills will be a welcome addition to Tesoro and Tesoro Logistics' boards, further strengthening our ability to guide our company into the future."
Tesoro, soon to become Andeavor, is an independent refiner and marketer of petroleum products. Tesoro, through its subsidiaries, operates 10 refineries in the western United States with a combined capacity of over 1.1 million barrels per day and ownership in a logistics business.
Its retail-marketing system includes approximately 3,000 retail stations marketed under multiple well-known fuel brands, including ARCO, SuperAmerica, Shell, Exxon, Mobil, Conoco, Tesoro, USA Gasoline and Giant