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SAN ANTONIO -- Just three days after surprising analysts and investors by threatening to pull out of a scheduled deal with Valero Energy Corp., Tesoro Petroleum Corp. pulled the trigger on a deal to acquire a refinery and 70 convenience stores in California.
Tesoro Chairman Bruce Smith announced last month that in order to close on the deal to acquire the
168,000 barrel-per-day (bpd) Golden Eagle Refinery and 70 associated c-stores, the companies would have to amend the terms of the initial deal, which was struck last year.
The terms of the new agreement have been adjusted to include a $50 million price reduction bringing the total purchase price to $1.075 billion and delayed payment of $150 million of the purchase price in the form of two ten-year notes.
The amended terms of the agreement have already been approved by the California Attorney General and are subject to review by the Federal Trade Commission. The transaction is expected to close on May 17, but could close earlier depending on receipt of the approvals and Tesoro's receipt of final documentation of the amendment to its existing credit facility.
"Obviously, we were disappointed that the transaction did not go through as originally outlined, but the revised terms of the transaction are still very favorable for all parties and an expedited close is also in the best interest of all parties," said Valero Chairman and CEO Bill Greehey. "This agreement is good news for the employees, shareholders and other stakeholders. It enables Tesoro and Valero to move ahead with the transaction and assures the Golden Eagle refinery and retail employees a sound future."
The divestiture of the Golden Eagle Refinery and associated retail assets was mandated by the consent order executed last year between Valero and the Federal Trade Commission and similar orders executed with the states of California and Oregon as a condition of the company's merger with Ultramar Diamond Shamrock Corp.
With the deal, Tesoro operates a branded network of more than 600 stores, including 80 Mirastar units with Wal-Mart, and six refineries.
Despite the divestiture, Valero is also one of the nation's largest retail operators with approximately 4,600 convenience stores in the United States and Canada under various brand including Diamond Shamrock, Ultramar, Valero and Total.