Valero Energy and Premcor have struck a deal for Valero to buy Premcor for $8 billion.
“This transaction is one of the largest and most strategic acquisitions in Valero’s history,” said Valero chairman and CEO, Bill Greehey. “We are acquiring several very strategic refineries for significantly less than their combined replacement value, and we’ll be improving the profitability of these plants by capturing synergies, improving their reliability and yields, and increasing their capacities.
Valero will become the biggest refiner in North America by adding four refineries and 790,000 barrels per day (BPD) of throughput capacity to its system.
A Bloomberg article says, “The U.S. Federal Trade Commission may object to the Premcor deal because it will increase the concentration of Valero-owned refining capacity in the Northeast and the Gulf Coast region, said Evan Smith, who manages $450 million, including 75,000 Valero shares, at U.S. Global Investors in San Antonio.”
According to a press release, Valero will have total assets of $25 billion and annual revenues of nearly $70 billion, which would rank it No. 15 on the current listing of the Fortune 500. Adding Premcor’s refineries in Port Arthur, Texas; Memphis, Tennessee; Delaware City, Delaware; and Lima, Ohio will give Valero 19 refineries with a total throughput capacity of 3.3 million BPD.
“This acquisition is also good news for consumers because we have a track record of investing in and expanding our refineries. In fact, from 1996 through the end of this year, we will have increased our refining system’s throughput capacity by more than 380,000 BPD — the size of two world-scale refineries — by expanding our existing facilities. Not only do we have the expertise, we also have a strong balance sheet, an investment-grade credit rating, access to low-cost capital and good cash flow, which enables us to make the costly ‘stay-in-business’ environmental investments, as well as the capital investments necessary to continue increasing our refining capacity,” said Greehey.
Chris is a staff writer for Murdok. Visit Murdok for the latest ebusiness news.
