SALT LAKE CITY — HollyFrontier Corp. and its transportation business Holly Energy Partners LP (HEP) have entered into definitive agreements to acquire Sinclair Oil Corp. and Sinclair Transportation Co. from locally based The Sinclair Cos.
Under the terms of HollyFrontier's definitive agreement, the company will acquire Sinclair's branded marketing business and all commercial activities, renewable diesel business, and two refineries based in the Rocky Mountains.
The deal also calls for the formation of a new parent company, Dallas-based HF Sinclair Corp., which will replace HollyFrontier as the public company trading on the New York Stock Exchange.
The transaction is valued at $1.8 billion. Once the deal is closed, HollyFrontier's existing senior management team will operate the combined company and Sinclair will have the right to nominate two members to the new company's board of directors.
HollyFrontier's acquisition of Sinclair's branded marketing business, refineries and its renewable diesel business is expected to:
- Diversify HollyFrontier's business with the addition of Sinclair's iconic brand and integrated distribution network;
- Increase the size and scale of HollyFrontier's renewables business;
- Deliver financial benefits through accretion and cost savings;
- Enable the combined company to generate significant free cash flow, maintain strong balance sheet and facilitate the return of capital to stockholders; and
- Deepen HollyFrontier's and Sinclair's commitment to ESG and sustainability.
Known for its mascot, a green dinosaur named Dino, Sinclair Oil's 1,500-plus branded gas stations are located in 29 states. Reports surfaced in March 2020 that the company was exploring a sale and put a potential price tag at between $2 billion and $3 billion, as Convenience Store News previously reported.
In the second transaction, HEP will acquire Sinclair's integrated crude and refined products pipelines and terminal assets, including approximately 1,200 miles of pipelines, eight product terminals and two crude terminals. In addition, HEP will acquire Sinclair's interests in three pipeline joint ventures.
Upon closing of this deal, HEP's existing senior management team will continue to operate HEP and Sinclair will have the right to nominate one member to the HEP board of directors.
"HollyFrontier was formed through a transformational merger that facilitated a decade of significant stockholder returns along with growth and diversification into lubricants and renewables. We believe these transactions with Sinclair represent a similar inflection point, marking the beginning of our next chapter as HF Sinclair," said Mike Jennings, CEO of HollyFrontier and HEP.
"With this accretive transaction, we are adding an integrated marketing business with an iconic brand while building on the strength of our expanded refining network, increasing our scale and accelerating the growth of our renewables business," he added. "Together, with Sinclair and the dedicated employees who make it successful, we will be positioned to further build this business, capture synergies, and generate cash that will facilitate both capital return to stockholders and further investment in the business."
Both deals are on track to close in mid-2022.
"As the oil and gas industry has evolved in recent years, we have carefully considered how best to position Sinclair's refinery and logistics assets and their related operations for the future. We're confident these businesses — and the dedicated employees who operate them — will continue to thrive under this new ownership structure," said Ross Matthews, chairman and CEO of Sinclair.
"We expect these businesses will benefit significantly from HollyFrontier's and HEP's operational expertise, their network of refineries and midstream assets in the Western U.S., and the flexibilities that come with being part of a larger organization," Matthews continued. "Sinclair's employees bring a wealth of talent and capability, including in the production of renewable diesel, which will be an important and growing line of business for HF Sinclair. Sinclair also adds to HF Sinclair an outstanding and extremely successful brand marketing team. The transaction will help accelerate the ongoing rapid expansion of our Sinclair branded retail sites and the iconic DINO brand."