SAN ANTONIO, Oct. 18, 2018 (GLOBE NEWSWIRE) -- Valero Energy Corporation (NYSE: VLO) and Valero Energy Partners LP (NYSE: VLP) announced the execution of a definitive agreement and plan of merger pursuant to which Valero will acquire, for cash, all of the outstanding publicly held common units of the Partnership at a price of $42.25 per common unit, for an aggregate transaction value of approximately $950 million. The Transaction price represents an approximate 12.4 percent premium to the 30 trading-day volume weighted average price of the Partnership’s common units as of October 17, 2018.
The Partnership also announced today that the board of directors of the general partner of the Partnership declared a quarterly cash distribution of $0.551 per unit on all of its outstanding common units for the quarter ended September 30, 2018. The Third Quarter Distribution is payable on November 9, 2018 to unitholders of record at the close of business on November 1, 2018. Under the Merger Agreement, prior to the closing of the Transaction, the GP Board may not declare, and the Partnership may not pay, any distribution other than the Third Quarter Distribution.
Simultaneously with the execution of the Merger Agreement, the Partnership and an indirect wholly owned subsidiary of Valero that is the record holder of the common units of the Partnership that are beneficially owned by Valero entered into a support agreement whereby such subsidiary has agreed to deliver a written consent approving the Transaction prior to the closing thereof. The written consent delivered pursuant to the Support Agreement will constitute the requisite vote of the Partnership’s common units to approve the Transaction. As a result, the Partnership has not solicited and is not soliciting approval of the Transaction by holders of the Partnership’s common units.
The Transaction will close as soon as possible following the satisfaction of certain customary closing conditions. Upon the closing of the Transaction, the Partnership will be an indirect wholly owned subsidiary of Valero and will cease to be a publicly held partnership.
The board of directors of Valero delegated to a special committee consisting of Valero Board members who do not own any of the Partnership’s common units the full power, authority and responsibility to review, evaluate, negotiate and approve the Transaction, for and on behalf of the Valero Board and Valero. The Valero Special Committee has unanimously approved the Transaction.
Upon receiving the merger proposal, on September 21, 2018 the GP Board directed its Conflicts Committee, composed entirely of independent directors, to review, evaluate, negotiate and provide special approval of the Transaction. The GP Conflicts Committee, after consultation with its independent legal and financial advisors, and following negotiations between the GP Conflicts Committee and the Valero Special Committee increasing the price per common unit and certain other changes, unanimously approved the Transaction and determined that the Transaction is fair and reasonable to the unaffiliated holders of the Partnership’s common units and in the best interest of the Partnership. Following the determination of the GP Conflicts Committee, the GP Board unanimously approved the Transaction and determined that the Transaction is fair and reasonable to the unaffiliated holders of the Partnership’s common units and in the best interest of the Partnership.
Advisors
J.P. Morgan Securities LLC acted as financial advisor to Valero, Baker Botts L.L.P. acted as Valero’s legal advisor and Richards, Layton & Finger, PA acted as special Delaware counsel to Valero on the Transaction. Jefferies LLC acted as financial advisor to the GP Conflicts Committee and Akin Gump Strauss Hauer & Feld LLP acted as the GP Conflicts Committee’s legal advisor on the Transaction.
About Valero
Valero Energy Corporation, through its subsidiaries, is an international manufacturer and marketer of transportation fuels and other petrochemical products. Valero, a Fortune 50 company based in San Antonio, Texas, with approximately 10,000 employees, is an independent petroleum refiner and ethanol producer, and its assets include 15 petroleum refineries with a combined throughput capacity of approximately 3.1 million barrels per day and 11 ethanol plants with a combined production capacity of 1.45 billion gallons per year. The petroleum refineries are located in the U.S., Canada, and the United Kingdom (“U.K.”), and the ethanol plants are located in the Mid-Continent region of the U.S. In addition, Valero owns the 2 percent general partner interest and a majority limited partner interest in Valero Energy Partners LP. Valero sells its products in both the wholesale rack and bulk markets, and approximately 7,400 outlets carry Valero’s brand names in the U.S., Canada, the U.K., and Ireland. Please visit www.valero.com for more information.
About the Partnership
Valero Energy Partners LP is a master limited partnership formed by Valero Energy Corporation to own, operate, develop and acquire crude oil and refined petroleum products pipelines, terminals, and other transportation and logistics assets. With headquarters in San Antonio, the Partnership’s assets include crude oil and refined petroleum products pipeline and terminal systems in the Gulf Coast and Mid-Continent regions of the U.S. that are integral to the operations of 10 of Valero’s refineries. Please visit www.valeroenergypartners.com for more information.
