Delek US buys 48% Alon USA stake

Avigdor Kaplan and Uzi Yemin
Avigdor Kaplan and Uzi Yemin

Alon Israel Oil, which badly needs cash, has sold a 48% stake for $572.4 million.

Delek US Holdings Inc. (NYSE:DK) will acquire the holdings of Alon Israel Oil Company Ltd., which is seeking cash to ease its shaky financial situation, in Alon USA Energy Inc. (NYSE:ALJ). At the end of yesterday's trading in the US, Delek US, managed by chairman, president, and CEO Ezra Uzi Yemin, and Alon Israel Oil, managed by CEO Avigdor Kaplan and controlled by Shraga Biran, announced that Delek US would acquire 48% of the shares in Alon USA Energy (33.7 million shares) for payments, a seller's loan, and 9% of the buyer's shares, worth a total of $572.4 million (NIS 2.3 billion), based on a $37.90 price for the Delek US share.

The price received by Alon Israel Oil is composed of cash, bonds, and Delek US shares. Delek US will pay Alon Israel Oil $200 million (to be financed from equity and loans), and will allocate six million Delek US shares, making Alon Israel Oil the largest shareholder in Delek US. Delek US will also give Alon Israel Oil a $145 million unsecured note for a seller's loan at 5.5% annual interest that will mature in January 2021.

In addition, conditions were set; if these are fulfilled, Alon Israel Oil will be allocated 200,000 more Delek US shares. The Alon USA Energy share has been rising recently as a result of the negotiations for the deal. In view of these rises, the deal signed reflects a premium of "only" 10% for Alon USA Energy.

The deal will provide Alon Israel Oil with cash, in addition to the marketable Delek US shares, which it can sell six months after the deal is completed; this will help stabilize Alon Israel Oil. The agreement between Delek US and Alon Israel Oil, which states that Delek US will hold up to 49.9% of the shares in Alon USA Energy, is valid for one year from the time the deal is completed.

From this date onward, Delek US will therefore be able to merge Alon USA Energy into it, as market sources believe will happen. Delek US noted that completion of the deal was contingent on obtaining a number of approvals, which is scheduled for the second half of May.

Bank of America Merrill Lynch and Barclays acted as Delek's financial advisors in the deal.

Published by Globes [online], Israel business news - www.globes-online.com - on April 15, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

Avigdor Kaplan and Uzi Yemin
Avigdor Kaplan and Uzi Yemin
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