By OGJ editors
HOUSTON, Nov. 1 -- Valero LP, San Antonio, agreed to buy Kaneb Services LLC and Kaneb Pipe Line Partners LP, Dallas, in a $2.3 billion cash-stock deal that will create the largest US terminal operator and the second-largest petroleum liquids pipeline operator.
Including $500 million in assumed debt and other liabilities, the total transaction value is $2.8 billion, Valero LP said. The transaction, expected to close in first quarter 2005, remains subject to approvals from shareholders and antitrust regulators.
Kaneb Services and Kaneb Pipe Line Partners will become wholly owned subsidiaries of Valero LP, a master limited partnership owned 46% by refiner Valero Energy Corp., the general partner.
After the purchase, Valero LP will own 6,900 miles of products pipeline, 800 miles of crude oil pipeline, and a 2,000-mile anhydrous ammonia pipeline. It also will own 101 terminals in 30 states, Canada, Mexico, the Netherlands Antilles, Australia, New Zealand, and the UK.
The combined system will include four crude oil storage tank facilities having a combined 85 million bbl of capacity.
Terms
Valero LP will pay $525 million, or $43.31/share, for Kaneb Services. In addition, Kaneb Pipe Line Partners will receive Valero stock worth about $61.50/share.
Valero LP Pres. and CEO Curt Anastasio said the acquisition will be accretive to cash flow and is expected to produce about $25 million/year in operating savings. Upon closing, he will retain his titles, and Bill Greehey will remain chairman of the general partner.
