HF Sinclair to buy remaining Holly Energy stake in $1.44 bln deal - Reuters

HF Sinclair to buy remaining Holly Energy stake in $1.44 bln deal | Reuters

HF Sinclair to buy remaining Holly Energy stake in $1.44 bln deal

Aug 16 (Reuters) - HF Sinclair (DINO.N) will acquire all the outstanding shares of smaller oil pipeline operator Holly Energy Partners (HEP.N) it does not already own in a cash-and-stock deal, the companies said on Wednesday.

Holly Energy shareholders will receive 0.315 shares of HF Sinclair and $4 for every share held, which values the deal at $1.44 billion as per a Reuters calculation. The offer represents a premium of 2% to Holly's last closing price. HF Sinclair holds 47.16% of Holly Energy, as per Refinitiv data.

HF Sinclair did not immediately respond to a Reuters request asking for a total deal value.

The oil and gas industry has financed billions of dollars in pipeline and storage products under Master Limited Partnerships (MLPs) since former President Ronald Reagan signed it into legislation in 1986, allowing them as a way to spur energy investment.

The U.S. refining and midstream industries have consolidated in recent years, a process which accelerated after the coronavirus pandemic drastically reduced demand for transportation fuels.

Larger refiner Phillips 66 (PSX.N) in 2021 also purchased the remaining units it did not own of its limited partnership, Phillips 66 Partners, for $3.4 billion, to simplify its governance and corporate structure.

HF Sinclair CEO and President Tim Go said the deal to acquire Holly will help reduce costs and be accretive to earnings per share as well as available free cash flow within the first twelve months.

The transaction is expected to close in the fourth quarter of 2023.

Separately, HF Sinclair's board of directors has authorized $1 billion in share buybacks.

Reporting by Tanay Dhumal in Bengaluru; Editing by Nivedita Bhattacharjee and Krishna Chandra Eluri

Our Standards: The Thomson Reuters Trust Principles.

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