January 14, 2019 [San Antonio Business Journal] - San Antonio-based Valero Energy Corp. has completed its merger with a subsidiary that owns and operates pipelines and storage terminals, the company announced Thursday morning.
Parent company Valero announced in October its plans to buy logistics arm Valero Energy Partners LP at $42.25 per share. The master limited partnership, or MLP, owns and operates pipelines and storage terminals in Texas, Oklahoma, Louisiana and Tennessee that support Valero refineries.
The closing of the merger comes after a strong third quarter for the parent company and its MLP, which reported $141 million in revenue. That was an increase of $31 million from third quarter 2017, according to a statement to investors. Valero Energy Partners, whose stock stock was formerly traded under the symbol VLP, attributed the increase to contributions from the terminal in Port Arthur, Texas, and a company pipeline that runs between Louisiana and Mississippi.
Valero made a profit of more than $850 million in the third quarter, which CEO Joe Gorder said was due to discounts on domestic crude oil over foreign crude oil and strategic pipelines.
The company’s decision to buy Valero Energy Partners is in line with an industry trend brought on by changing capital market conditions. Dallas-based Energy Transfer LP and San Antonio-based NuStar Energy LP have made similar moves to merge with their MLPs.
“After considering a range of options, we concluded that a merger would provide the best outcome for VLP unit holders and VLO shareholders,” Gorder told investors in October. “The merger offers a premium to VLP’s average trading prices and immediate conversion of VLP’s equity to cash.”
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