Delek Group Ltd. (TASE: DLEKG) subsidiary Delek US Holdings Inc. (NYSE:DK) will acquire the 53.7% controlling interest in Lion Oil Company from Ergon Inc. in cash, shares, and debt transaction.
Delek US will pay $45 million in shares and $50 million in cash. It will also guarantee a $50 million note issued by Lion Oil to Ergon. The deal involves the payment or replacement of Lion Oil's debt to Erdon.
Delek acquired 34.6% of Lion Oil in 2007. The deal with Ergon will bring Delek US's stake in Lion Oil to 88.3%. Delek US expects to close the deal in the second quarter.
The rest of the shares are held by private investors, and Delek US may try to buy their holdings to achieve full ownership of Lion Oil.
Lion Oil owns a refinery which produces 80,000 barrels of day of oil products, and an asphalt distribution terminal in El Dorado, Arkansas, several pipelines in Arkansas and Louisiana, and three light product distribution terminals in Memphis and Nashville, Tennessee, and in El Dorado.
Delek US president and CEO Uzi Yemin said, “With the continued support of our Israeli relationship banks and our majority shareholder, Delek Group, we are in the process of securing long-term financing for this transaction."
Delek US's share price closed at $12.26 yesterday, giving a market cap of $667 million.
Published by Globes [online], Israel business news - www.globes-online.com - on March 22, 2011
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