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Valero to roll up its MLP in $950M deal


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Valero to roll up its MLP in $950M deal

The petroleum refining giant Valero Energy Corp. struck a $950 million deal on Oct. 18 to roll up its master limited partnership Valero Energy Partners LP, the latest in a string of high-profile MLP roll-ups.

Under the definitive agreement and plan of merger, Valero would acquire all of the publicly held units of the MLP at a $42.25 each, a premium of roughly 12.4% to the volume weighted 30-trading-day average price of Valero Energy Partners units as of Oct. 17. The MLP also agreed to deliver a written consent of approval to a Valero subsidiary that is the record holder of the Valero Energy Partners common units Valero currently owns, according to an Oct. 18 news release.

Valero Energy Partners will not need to ask for approval from its unit holders, the release said. Upon the transaction's closing, the partnership would become an indirect wholly owned subsidiary of Valero and cease to be a publicly held partnership.

Board members of Valero who do not any of the partnership's common units were tasked by Valero to review, negotiate and approve the transaction on behalf of the company, and voted unanimously to approve the transaction. The conflicts committee of the board of Valero Energy Partners also voted to approve the merger deal after negotiating for an increase in the price per common unit.

J.P. Morgan Securities LLC acted as financial adviser to Valero, while Baker Botts LLP acted as legal adviser and Richards Layton & Finger PA acted as special Delaware counsel on the transaction. Jefferies LLC acted as financial adviser to the partnership's conflicts committee, and Akin Gump Strauss Hauer & Feld LLP acted as the committee's legal adviser.

The Valero roll-up would join recent energy MLP deals including Dominion Energy Inc.'s intended purchase of Dominion Energy Midstream Partners LP and the merger of Energy Transfer Partners LP and Energy Transfer Equity LP, expected to close Oct. 19.