Tesoro gets bridge facility for planned Western Refining acquisition

By Devika Patel

Knoxville, Tenn., Nov. 17 – Tesoro Corp. intends to fund the $4.1 billion stock acquisition of Western Refining, Inc., an El Paso, Texas-based independent refining and marketing company, with a bridge facility, management said on a Thursday conference call.

“We have committed financing in place for this transaction in the form of a bridge facility and we intend to refinance Western’s existing debt in an opportunistic and prudent manner prior to close,” executive vice president, chief financial officer and corporate development Steven Sterin said on the company’s conference call announcing the acquisition on Thursday.

“Western [Refining] Logistics’ existing debt is to remain in place at close,” Sterin added.

Acquisition

Tesoro will acquire Western at an implied current price of $37.30 per Western share in a stock transaction, representing an equity value of $4.1 billion based on Tesoro’s closing stock price on Wednesday of $85.74.

The purchase price represents a 22.3% premium to the Wednesday closing price of the stock and a 31.6% premium to the past 30-day volume weighted average price, the company noted in a press release.

The transaction has an enterprise value of $6.4 billion, including the assumption of approximately $1.7 billion of Western’s net debt and the $605 million market value of a non-controlling interest in Western Refining Logistics, LP.

The acquisition is expected to close in the first half of 2017.

Terms

Western shareholders can choose to receive 0.4350 Tesoro shares for each Western share they own, or $37.30 in cash per Western share.

The San Antonio-based owner, operator, developer and acquirer of crude oil and refined products logistics assets will pay about $404 million for the first 10.8 million shares surrendered for cash, after which cash will be issued for surrendered shares on a prorated basis, the remainder to be paid in stock.

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