Valero Energy Partners to acquire terminals in a $465 million deal

Logistics company Valero Energy Partners LP said Wednesday that it will acquire two terminals from refiner Valero Energy Corp. for $465 million in a transaction that’s expected to close Oct. 1.

The terminals support San Antonio-based Valero’s Corpus Christi East and West refineries. The assets consist of 134 tanks with 10.1 million barrels of storage capacity for crude oil and petroleum products, the companies said.

Valero Partners said it expects to finance the acquisition with $395 million in borrowings under a subordinated loan agreement with Valero, as well as the issuance of additional common units and general partner units to Valero subsidiaries, valued collectively at approximately $70 million.

The newly issued units will be allocated in a proportion allowing refiner Valero, the general partner, to maintain its 2 percent general partner interest.

When the deal is closed, Valero Partners plans to enter into a 10-year terminaling agreement with a subsidiary of Valero. The business to be acquired is expected to contribute approximately $50 million of earnings before interest, taxes and other items in its first full year of operation.

Joe Gorder, chairman and CEO of Valero Partners and Valero Energy, said earlier this year that he expected the partnership to complete $1 billion in logistics acquisitions from Valero this year.

“With transactions totaling $1.14 billion, we’ve exceeded our $1 billion target for acquisitions in 2015,” Gorder said Wednesday in a statement.

He said the partnership is “on course to deliver year-over-year distribution growth in excess of 25 percent.”

The terms of the transaction were approved by Valero’s board of directors following the approval and recommendation of the board’s conflicts committee.

The conflicts committee is composed of independent directors and was advised by Evercore Group LLC and its financial adviser, as well as Akin Gump Straus Hauer & Feld LLP, its legal counsel.

Valero Energy formed Valero Partners in December 2013 to own, develop and acquire pipelines, terminals and other transportation and logistics assets.