HollyFrontier to buy most of Sinclair Oil's assets in $2.6 bln deal

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Sinclair Oil's Dino balloon sits in the inflation area ahead of the 90th Macy's Thanksgiving Day Parade in Manhattan, New York, U.S., November 23, 2016. REUTERS/Andrew Kelly

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Aug 3 (Reuters) - HollyFrontier Corp (HFC.N)will pay $2.6 billion for almost all of Sinclair Oil's assets, adding new refining, pipeline and storage facilities in the U.S. Rocky Mountain region, the company's chief executive said on Tuesday.

The deal comes as U.S. fuel demand recovers from last year's COVID 19-led record lows, with states reopened and road travel trending near pre-pandemic levels.

"This is exceptionally transformative for us and differentiates us from other downstream businesses," said HollyFrontier's Chief Executive Mike Jennings in conference call on Tuesday.

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The Sinclair deal follows HollyFrontier's May announcement that it plans to buy an Anacortes, Washington refinery from Royal Dutch Shell Plc (RDSa.L) by the end of 2021 for about $500 million.

A new company, HF Sinclair Corp, will replace HollyFrontier as the public company trading on the New York Stock Exchange.

HollyFrontier said that at the closing of the deal, expected in mid-2022, HollyFrontier shares will covert into shares of HF Sinclair on a one-for-one basis.

HF Sinclair will then issue about 60.2 million shares to stockholders of The Sinclair Companies, Sinclair Oil's parent, giving them 26.75% of proforma ownership in the new company.

As part of the deal, HollyFrontier will buy Sinclair's branded marketing unit, renewable diesel unit and two Rocky Mountain-based refineries.

Holly Energy Partners (HEP.N), HollyFrontier's transportation business, will buy Sinclair's 1,200 miles of pipeline assets and storage terminals with around 4.5 million barrels of capacity.

The pipeline and storage businesses areestimated to be worth around $758 million in cash and stock. Sinclair stockholders will own about 16.6% of Holly Energy Partners after the deal closes.

The deal does not include exploration and production assets owned by Sinclair Oil & Gas, the companies said.

Sinclair earlier this year became embroiled in a controversy surrounding three last-minute biofuel waivers granted to it by the U.S. Environmental Protection Agency (EPA) under the Trump administration. read more

The waivers were vacated by a U.S. appeals court in May after a motion filed by the EPA in April, under President Joe Biden's administration. read more

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Reporting by Rithika Krishna in Bengaluru; editing by Vinay Dwivedi and Saumyadeb Chakrabarty; additional reporting by Erwin Seba in Houston. Editing by Jane Merriman

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