Valero to buy pipeline operator Kaneb
Valero announced that it will purchase Kaneb Services and Kaneb Pipe Line Partners in a $ 2.8 bn deal that will
create one of the nation's largest petroleum pipeline and oil terminal operators.
Valero will control nearly 10,000 miles of oil and refined-products pipelines after the Kaneb deal, which is expected
to close in the first quarter of 2005. It will also own 101 terminal facilities located in 30 states and abroad and
four crude oil storage facilities with a capacity of 85 mm barrels, Valero said.
"The combined entity will be in a much better strategic position with stronger, more diversified operations,
increased earnings stability and a terrific platform for future growth," said Curt Anastasio, Valero president and
CEO.
The deal is subject to the approval of the unit holders of Valero and Kaneb Partners and the shareholders of Kaneb
Services, as well as federal regulators. Terms call for Valero to acquire all shares of Kaneb Services for $ 525 mm,
or $ 43.31 per share.
"We have created significant value over the years in the Kaneb companies and we believe this transaction provides an
outstanding opportunity to our investors," said John Barnes, Kaneb Services chairman and CEO.
Kaneb Pipe Line Partners shareholders will receive Valero stock worth $ 61.50 per share, subject to a trading range
of Valero's stock price upon completion of the deal.
Valero owns and operates pipelines, terminals and storage facilities primarily in Texas, New Mexico, Colorado,
Oklahoma and California. It transports crude oil, natural gas and refined products for refining giant Valero Energy,
which owns 46 % of the company.
