Looks like the oil industry has itself another merger.
A Texas oil company said Monday it is buying Scottsdale-based gas refiner and retailer Giant Industries for an estimated $1.5 billion in cash and debt assumption.
So is this good news or bad news?
Though this probably won't affect what's going on at your local filling station, so far it's been good for stockholders.
El Paso-based Western Refining is offering Giant shareholders $83 per share, a premium of more than 15 percent over Friday's closing price.
Giant stock rose 10 percent the morning after the merger was announced. Here's what the combined companies will look like:
The merger would create the fourth largest publicly traded independent refiner and marketer in the country with a combined annual income topping $551 million and a total crude oil capacity throughput of 216,000 barrels per day.
Here's what fallout could be on the horizon.
Western said it will keep an operation in Scottsdale, but will "consolidate overlapping functions." The Texas company said, however, in a statement announcing the merger, that "significant workforce reductions are not expected."
Let's hope so. According to an earlier report, Western plans to finance the deal with $250 million in existing cash and a $2 billion loan from Bank of America.
Here's my 2 cents worth. $250 million in "existing cash" is helping to fund this deal. Again, for all the criticism of oil company CEO's, this at least goes to show that not all oil company profits go towards executive compensation.
Here's hoping that the end result will be good for both businesses and consumers. As ridiculous as that seems to some, I still believe in that utopia.
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