HollyFrontier, pipeline unit to buy Sinclair Oil in $2.6 B deal
Hollyfrontier and its pipeline partner will buy almost all of Sinclair Oil's assets in two deals totaling around $2.6 billion, the companies said, adding new refining, pipeline and storage assets to their portfolio.
The deals come as U.S. fuel demand continues to recover from last year's coronavirus-led record lows, with states starting to reopen and road travel trending toward pre-pandemic levels.
A new company, HF Sinclair Corp, will replace HollyFrontier as the public company trading on the New York Stock Exchange, it said in a statement.
HollyFrontier said that at the closing of the deal, expected in mid-2022, HollyFrontier shares will convert 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.
Sinclair earlier this year became embroiled in a controversy surrounding three last-minute biofuel waivers granted to it by the U.S. Environmental Protection Agency (EPA) under the Trump administration.
The waivers were vacated by a U.S. appeals court in May after a motion filed by the EPA in April, under the Joe Biden administration.
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 (HEP.N), 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 Holly Energy Partners deal is expected to be worth around $758 million in cash and stock. Stockholders of The Sinclair Companies will own about 16.6% of Holly Energy after the deal closes.
The HollyFrontier deals will not include exploration and production assets owned by Sinclair Oil & Gas, the companies said.
The companies said both deals are expected to add to HF Sinclair's earnings, cash flow and free cash flow within the first full year.
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