Dallas – Valero Energy Corp.’s planned $6.9 billion purchase of Premcor Inc. – a deal that will create the largest oil refiner in North America – comes as high prices drive up the industry’s profit margins.
Analysts said Valero’s move is unlikely to offer immediate help to motorists weary of paying more than $2 a gallon for gasoline.
But company officials pledged to improve efficiency and capacity at the four refineries it is buying, which could eventually ease pressure on prices.
Valero hopes to complete the cash-and-stock deal by Dec. 31, but it could face regulatory hurdles because both Valero and Premcor operate large refineries in the Northeast.
Shares of Premcor jumped 18 percent, up $10.70 to $69.70, and Valero shares gained 83 cents to $75.87 on the New York Stock Exchange.
Valero chairman and chief executive William Greehey predicted that antitrust regulators will approve the acquisition because they let Sunoco Inc., the largest refiner in the region, buy a New Jersey refinery from El Paso Corp. last year.
If not, Valero could walk away from the deal, Greehey suggested.
“We would not sell any major assets at Valero,” he said.
San Antonio-based Valero said Monday that it would buy Premcor’s four refineries in a move that will increase the capacity of its refinery network by nearly one-third.
The transaction would boost Valero’s annual revenue to nearly $70 billion, enough to rank No. 15 on the Fortune 500 list of the nation’s biggest companies.
