HollyFrontier Acquires Sinclair Oil

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HollyFrontier announced plans yesterday to acquire Sinclair Oil Corp. and Sinclair Transportation Co. in a transaction valued at $1.8 billion, creating an integrated downstream petroleum and renewable fuels company to be named HF Sinclair Corp. and adding two Colorado refineries.

Under the transaction, HollyFrontier Corp. and Holly Energy Partners will acquire the two Sinclair businesses from The Sinclair Cos., and HF Sinclair Corp. will replace HollyFrontier as the public company trading on the New York Stock Exchange.

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Under the terms of HollyFrontier’s definitive agreement, it will acquire Sinclair’s branded marketing business and all commercial activities, its renewable diesel business and two Rocky Mountain, Colorado-based refineries.

HollyFrontier said it expects the transaction to accelerate its growth while increasing scale and diversification. It is also expected to allow HollyFrontier to integrate downstream into branded wholesale distribution. “HF Sinclair will drive incremental free cash flow growth through its expanded refining business, integrated distribution network, leading renewable fuel position and growing lubricants and specialties business,” HollyFrontier stated in a news release.

Upon closing of the transaction, HollyFrontier’s existing senior management team will operate the combined company. Under the definitive agreements, Sinclair will be granted the right to nominate two directors to the HF Sinclair Board of Directors at the closing. The new company will be headquartered in Dallas, Texas, with combined business offices in Salt Lake City, Utah.

The transactions were unanimously approved by both HollyFrontier’s and Holly Energy Partners’ board of directors and are expected to close in mid-2022, subject to closing conditions and regulatory clearance.

In May, HollyFrontier announced the acquisition of the Puget Sound Refinery, a 149,000 barrel per day facility in Anacortes, Washington, from Equilon Enterprises, LLC, which does business as Shell Oil Products, for a purchase price of $350 million.

The acquisitions follow a string of major acquisitions by HollyFrontier in the lubricants and base oil segments over the last several years. The company acquired Parsippany, New Jersey-based Sonneborn for $665 million in November 2018. In the summer of 2018, HollyFrontier announced an agreement to buy Red Giant Oil Co., an Iowa company that claimed to be one of the country’s largest suppliers of locomotive engine oils.

In October 2016, HollyFrontier first announced plans to acquire Suncor Energy’s Petro-Canada lubricants business for CA $1.1 billion (then U.S. $845 million), diversifying HollyFrontier’s base oil portfolio to include API Group II and III base oils and also making it a prominent player in the finished lubricants market.