HollyFrontier completes acquisition of Sinclair
HollyFrontier Corp. and Holly Energy Partners LP announced March 14 the establishment of HF Sinclair Corp. as the new parent holding company of HollyFrontier and Holly Energy Partners and the completion of their respective acquisitions of Sinclair Oil Corp. and Sinclair Transportation Co. from The Sinclair Companies. Commencing at market open on March 15, 2022, HF Sinclair will replace HollyFrontier as the public company trading on the New York Stock Exchange and will trade under the ticker symbol “DINO” and under the new CUSIP number 403949 100.
HF Sinclair will be the parent company of a leading integrated downstream petroleum and renewable fuels company with enhanced scale and a strong marketing presence featuring:
An expanded refining business that includes seven complex refineries across the Mid-continent Southwest, Rocky Mountain and Pacific Northwest that convert discounted, heavy and sour crudes into a high percentage of gasoline, diesel and other high value refined products
A growing renewables business with three production facilities that are expected to produce approximately 380 million gallons of renewable diesel annually
A multinational lubricants business that produces specialty products and base oils, marketed under the Petro-Canada Lubricants, Sonneborn, Red Giant Oil and HollyFrontier Specialty Products brands
A leading marketing business, featuring the Sinclair brand and comprising 300-plus distributors and more than 1,300 independent wholesale branded sites located across 30 states
An expansive logistics business under Holly Energy Partners with an integrated logistics network connecting key crude and product regions and interests in strategic joint ventures that provide access to finished product pipelines and storage
Across its businesses, HF Sinclair will build on its legacy companies’ ongoing ESG efforts with increased renewables scale, a shared commitment to health and safety practices that best serve employees and communities, and a focus on risk management.
With the addition of Sinclair’s integrated crude and refined products midstream business, HEP significantly extends the reach of its network of pipelines and storage facilities, enhancing its earning power to capture new organic growth opportunities and expects to increase cash returns to unitholders.
“The completion of our transactions and the launch of HF Sinclair marks the start of the next phase of our company’s history,” said Mike Jennings, CEO of HF Sinclair and Holly Energy Partners. “We are moving forward as a more diverse, downward integrated business with scale that is positioned to drive growth and capital returns to our shareholders. We are also optimistic about the significantly expanded scale of Holly Energy Partners, which will benefit from long-term commitments from HF Sinclair. I am honored to welcome the talented Sinclair team to our organizations, and I look forward to working closely with them to capture the significant growth and value-creation opportunities ahead at both HF Sinclair and HEP.”
HollyFrontier’s senior management team will continue to operate HF Sinclair, which is headquartered in Dallas, Texas, with combined business offices in Salt Lake City, Utah. Holly Energy Partners’ senior management team will continue to operate Holly Energy Partners under the name Holly Energy Partners LP.
Pursuant to an agreement between HollyFrontier and Sinclair, Ross Matthews and Norman Szydlowski will be appointed to the HF Sinclair board of directors effective March 15. Collectively, the appointees have more than 60 years of energy industry experience. Matthews served as chairman and CEO of Sinclair Oil Corp. from October 2009 until the closing of the transaction. Szydlowski previously served as CEO of SemGroup Corp., Rose Rock Midstream and Colonial Pipeline Co. and as director of Sinclair Oil Corp. Additionally, pursuant to an agreement between Holly Energy Partners and Sinclair, Mark Peterson will be appointed to the Holly Logistics Services LLC board of directors. Peterson has more than 30 years of experience in the midstream sector and served as vice president of transportation for Sinclair Oil Corp. from January 2010 until the closing of the transaction and director and president of Sinclair Transportation Co. from August 2009 until the closing of the transaction.
In connection with the close of the transaction, all existing shares of HollyFrontier have automatically converted on a one-for-one basis into shares of common stock of HF Sinclair, and HF Sinclair has issued approximately 60.2 million shares of common stock to Sinclair, representing 27 percent of the pro forma equity of HF Sinclair with a value of approximately $2.1 billion based on HollyFrontier’s fully diluted shares of common stock outstanding and closing stock price on March 11.
Holly Energy Partners has also issued 21 million common units to Sinclair, representing 17 percent of the outstanding common units, and having a value of approximately $349 million based on Holly Energy Partners’ fully diluted common units outstanding and closing unit price on March 11.
Citi served as financial advisor to HollyFrontier, and Morgan, Lewis & Bockius served as HollyFrontier’s legal counsel. Bank of America Merrill Lynch served as financial advisor to the Holly Energy Partners conflicts committee, Bracewell served as Holly Energy Partners’ legal counsel and Morris, Nichols, Arsht & Tunnell LLP served as the Holly Energy Partners conflicts committee’s legal counsel. Wachtell, Lipton, Rosen & Katz served as legal counsel to both HollyFrontier and Holly Energy Partners.