DownstreamInvestors

HollyFrontier to acquire Sinclair Oil; new company to emerge

HollyFrontier

HollyFrontier, the independent petroleum refiner Texas-based, announced this Tuesday it will acquire Sinclair Oil Corporation and its units; in a transaction with a value of $1,8 billion. After the acquisition a new company will emerge: HF Sinclair Corporation.

Firstly, the new company HF Sinclair will replace HollyFrontier as the public company trading on the NYSE. At the closing of the transaction, shares of HollyFrontier will automatically convert on a one-for-one basis into shares of common stock of HF Sinclair.

Secondly, the acquisition will transform HollyFrontier and will drive its growth; specially as the company will now integrate downstream into branded wholesale distribution.

Consequently, the new company will drive incremental free cash flow growth through its expanded refining business; also, through its integrated distribution network, leading renewable diesel position; and also, growing lubricants and specialties business.

Thirdly, under the terms of the transaction, HF will acquire Sinclair’s integrated crude and refined products pipelines and terminal assets; including approximately 1,200 miles of pipelines; eight product terminals and two crude terminals with approximately 4.5 MMbbl of operated storage.

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Holly Frontier to grow its renewable diesel unit

In addition, HF will also acquire Sinclair’s interest in three pipeline joint ventures; the Powder Flats Pipeline (32.5% non-operated interest); the Pioneer Pipeline (49.9% non-operated interest); and also, the UNEV Pipeline (25% non-operated interest).

Moreover, under the agreement, Sinclair will have the right to nominate one director to the Holly Energy Partners Board of Directors. The transaction is still subject to regulatory and stockholder approval; but the companies expect to have it closed by mid 2022.

On the other hand, about the relevance of the acquisition, Mike Jennings, Chief Executive Officer of HollyFrontier, 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. We believe these transactions with Sinclair represent a similar inflection point.”

He also remarked. “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 also, accelerating the growth of our renewables business.”

Finally, about the renewable business unit, HF said that the transaction will increase the scale of its renewable diesel business; as Sinclair’s renewable diesel refinery in Wyoming now has a capacity of 10,000 barrels per day; and it is currently in the process of another expansion. Once the transaction is complete, the combined renewables business is expected to produce approximately 380 million gallons of renewable diesel per year.

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