US independent refiner and marketer of petroleum products Tesoro has reached a definitive agreement with independent refining and marketing company Western Refining, under which Tesoro will acquire Western for a total US$6.4bn.
The transaction is expected to create a highly integrated and geographically diversified refining, marketing and logistics company. In the upstream sector, the transaction will expand opportunities for logistics growth in crude oil production basins and product regions, particularly in the Permian basin. In the downstream sector, Western Refining will bring its three operational refineries in El Paso, Gallup, New Mexico and St. Paul Park, Minnesota, with a combined capacity of 237,000 bbl/d), to Tesoro's existing portfolio of refineries, with a combined capacity of 935,500 bbl/d, expanding the combined company's refining capacity to more than 1.1 mb/d. Tesoro's retail marketing system will also expand from over 2,400 service stations to more than 3,000.
The transaction is expected to close in the first half of 2017 and is subject to customary closing conditions, including approval by the shareholders of both companies and the receipt of regulatory approval.
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