Gasoline Politics and the Valero-Ultramar Deal

Soaring pump prices could pressure the FTC to intercede, and a forced sale of a refinery could take the glow off the merger

When Valero Energy (VLO ) announced on May 7 that it was buying rival oil-refiner Ultramar Diamond Shamrock (UDS ) for $6 billion in stock, cash, and assumption of debt, shareholders of both companies rejoiced. Valero's were happy because the San Antonio-based giant had found a relatively cheap way of adding to its refinery capacity, making it the second-largest refiner in the country. Ultramar shareholders were even happier because the bid represented a 30% premium for their company, also based in San Antonio.

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