Hess Corp. (HES), the oil company that settled a proxy fight with Paul Singer’s Elliott Management Corp. earlier this year, agreed to sell terminals on the U.S. East Coast and in St. Lucia to Buckeye Partners LP (BPL) for $850 million in cash.
The purchase includes 20 terminals that can hold a total of 39 million barrels of petroleum products, Houston-based Buckeye Partners said in a statement today. The transaction includes a multiyear commitment from Hess for storage and throughput on the network.
Buckeye Partners already owns 100 terminals with more than 70 million barrels of aggregate storage capacity and about 6,000 miles (10,000 kilometers) of pipelines that move petroleum products. The company said the purchase will expand its marine terminal business, with all but two of the Hess facilities at ports and 12 having deep-water access.
“Our integrated network of marine terminals should allow us to capture meaningful synergies from global logistic product flows,” Chief Executive Officer Clark C. Smith said in the statement. Along with expansions in the Southeast and the potential to accommodate more Latin American production, the transaction “provides the opportunity to create a large, integrated network in New York Harbor,” he said.
The sale is expected to close this quarter, New York-based Hess said today in a separate statement. Hess will also get an estimated $900 million from selling inventories at the terminals.
The transaction is part of a series of steps to streamline Hess’s assets. Shareholder Elliott Management has urged Hess to sell off businesses and focus its strategy. Hess agreed in May to add three of the investor’s nominees to the board, heading off a shareholder vote. With today’s deal, the company has announced or completed $5.4 billion in divestitures this year.
Buckeye Partners said in a separate statement it will make a public offering of 6.5 million partnership units to help fund the acquisition.
The sale was announced after the close of regular trading. Hess gained 0.3 percent to $78.75 at 4:42 p.m. in New York. Buckeye was unchanged at $64.35.
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