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EL PASO, Texas and SCOTTSDALE, Ariz. -- Western Refining Inc. and Giant Industries Inc. announced yesterday that both companies' boards of directors have unanimously approved an amendment to their merger agreement. Under the new agreement, Western will acquire all of Giant's outstanding shares for $77 per share in cash.
Under the terms of the original agreement, as reported by CSNews Online on August 29, Western Refining was to pay $83 per share.
Since the original agreement was announced, a number of unexpected events have occurred at Giant's facilities, resulting in the amended agreement, according to yesterday's announcement. These events include a recent fire at Giant's Yorktown refinery, which forced Giant's ultra low sulfur diesel processing unit to be shut down; a separate fire at Giant's Ciniza refinery; and the resulting increased costs and modified terms associated with Giant's insurance coverage.
Giant's ultra low sulfur diesel processing unit at its Yorktown refinery is expected to be fully operational by mid-February 2007, and its Ciniza refinery is expected to be fully operational by mid-December 2006, the statement said.
"We remain excited about the merger and believe that our combination with Giant continues to provide a number of strategic and financial benefits. The revised terms ... recognize the financial impact of these unexpected events. We look forward to closing the transaction and realizing the opportunities ahead," said Western's president and chief executive officer Paul Foster.
Western continues to expect the transaction with Giant to result in refinery efficiencies and cost savings of approximately $20 million annually starting in 2008. Western also continues to expect that the transaction will be immediately accretive to Western's earnings per share, excluding one-time transaction costs.
Closing of the transaction is subject to approval by Giant shareholders and satisfaction of other closing conditions, including expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.
As previously announced on October 10, Western and Giant have received a request for additional information from the Federal Trade Commission (FTC) in connection with the transaction. Requests for additional information are not unusual in connection with refinery transactions, the companies said. Western and Giant are working cooperatively with the FTC staff and expect to respond to the request in a timely manner.
The transaction is currently expected to close in the first quarter of 2007 and is not subject to any financing conditions, the announcement said.
Western Refining Inc., headquartered in El Paso, Texas, is an independent crude oil refiner and marketer of refined products, operating primarily in the Southwest region of the United States, including Arizona, New Mexico and West Texas.
Giant Industries Inc., headquartered in Scottsdale, Ariz., also is a refiner and marketer of petroleum products. Giant owns and operates one Virginia and two New Mexico crude oil refineries, a crude oil gathering pipeline system based in Farmington, New Mexico, which services the New Mexico refineries, finished products distribution terminals in Albuquerque, New Mexico, and Flagstaff, Arizona, a fleet of crude oil and finished product truck transports, and a chain of retail service station/convenience stores in New Mexico, Colorado and Arizona. Giant is also the parent company of Phoenix Fuel Co. Inc. and Dial Oil Co., both of which are wholesale petroleum products distributors.