Alon USA Energy (ALJ) shares were slightly lower in recent pre-market trade as Delek said in a regulatory filing that it is proposing to buy the shares of Alon USA that it doesn’t own at a fixed ratio of 0.44 Delek shares per Alon share. Delek currently owns 47.2% of Alon USA shares.
DK was higher over 5% at $17.29 in recent pre-market trade, suggesting a price per Alon share of $7.61 each, an 11.5% discount to ALJ’s closing price of $8.60 on Thursday.
“We believe both companies are currently undervalued to differing extents by the market, and our proposal reflects, in the context of the current and prospective challenges facing Delek’s and Alon’s sector, our view of the relative fundamental values of Alon and Delek; each company’s respective outlook and balance sheet profile; and potential synergies for the transaction,” Delek CEO Ezra Uzi Yemin said in a letter to Alon.
“Delek will not move forward with the proposed transaction unless it is approved by a special committee of the board of directors of Alon USA comprised entirely of directors independent of Delek,” the firm said. “In addition, the proposed transaction would be subject to a non-waivable condition that the majority of the outstanding shares of Alon USA common stock not owned by Delek or its affiliates approve the transaction.”
It also said it expects that the proposed transaction would require the approval of Delek’s stockholders.