HollyFrontier 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.
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, its 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, 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 are estimated 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.
“HollyFrontier was formed through a transformational merger that facilitated a decade of significant stockholder returns along with growth and diversification into lubricants and renewables," said Mike Jennings, CEO of HollyFrontier and HEP. "We believe these transactions with Sinclair represent a similar inflection point, marking the beginning of our next chapter as HF Sinclair.”
“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," said Jennings.
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, he said.
“We believe that HollyFrontier and HEP are an excellent cultural fit, with a shared commitment to integrity and respect for our employees, our communities and the environment,” said Ross Matthews, CEO of Sinclair.
Matthews said they anticipate a seamless transition for employees, distributors and other stakeholders following the closing of the transactions.
