Nov 12 Western Refining Inc said it
would buy a controlling stake in Northern Tier Energy LP
for about $775 million to add refining capacity with direct
access to cheap crude oil.
Western Refining will buy a 38.7 percent stake in Northern
Tier from private equity firms TPG Capital Management
and ACON Investments Ltd and 100 percent of the general partner
that controls Northern Tier.
Western Refining shares were up nearly 10 percent at $36.51
on Tuesday morning on the New York Stock Exchange. Northern Tier
shares rose 4 percent to $24.16.
The Wall Street Journal first reported the deal, citing
people familiar with the matter. ()
Northern Tier's refining business primarily consists of an
89,500-barrels-per-day refinery located in St. Paul Park,
Minnesota, near North Dakota's Bakken shale field.
The refinery is closer to the Bakken than most U.S.
refineries and is also well-positioned to receive discounted
Canadian crude oil from the big pipeline networks that run
U.S. refiners typically sell refined products such as
gasoline and diesel at prices linked to more expensive European
Brent crude, boosting margins for those with access to
cheap U.S. shale crude.
Bakken and Canadian crude differentials are expected to be
priced at a discount to international and other domestic crudes
for at least the next couple of years, Simmons & Co analysts
wrote in note to clients.
Western Refining operates the El Paso refinery in Texas and
Gallup refinery in New Mexico, with combined refining capacity
of about 151,000 barrels per day.
Northern Tier is structured as a master-limited partnership,
a dividend-paying investment vehicle that enjoys special tax
breaks and is often used by natural resources companies.
UBS Securities LLC was Western Refining's financial adviser,
while Pillsbury Winthrop Shaw Pittman LLP and Davis Polk &
Wardwell LLP were its legal counsels.
Barclays and J.P. Morgan Securities LLC served as
co-financial advisers to ACON and TPG.