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Delek US Holdings to Acquire Alon USA Partners in All-Stock Deal

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Delek US Holdings to Acquire Alon USA Partners in All-Stock Deal PART 2 OF 2

Alon USA Partners Declared 23% Higher 3Q17 Distribution

ALDW’s 3Q17 distributions

Alon USA Partners (ALDW) announced its 3Q17 results on November 8, 2017, along with the announcement of a merger with Delek US Holdings (DK), which we looked at in the previous part. ALDW also announced a 3Q17 distribution of $0.43 per share. That’s 23% higher than its 2Q17 distribution. Alon USA Partners is a variable distribution MLP.

Alon USA Partners Declared 23% Higher 3Q17 Distribution

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Excluding a charge for inventory fair value adjustment, Alon USA Partners’ 3Q17 operating margin was $15.92 per barrel compared to $9.22 per barrel for 3Q16. The increase was primarily due to a higher Gulf Coast 3-2-1 crack spread, a widening of the WTI (West Texas Intermediate) Cushing to WTI Midland spread, and a stronger wholesale marketing environment.

Ratings for Delek

Under the terms of the merger agreement between Alon USA Partners and Delek US Holdings, ALDW shareholders will receive 0.49 Delek US Holdings shares for each common share of ALDW. Currently, 47% of analysts surveyed by Reuters rate Delek US Holdings a “buy,” and the remaining 53% rate it a “hold.” Based on its median target price of $30, Delek has a 6% upside potential from its current price of $28.27.

In comparison, nearly 75% analysts rated CVR Refining (CVRR) a “hold,” and 20% of analysts rated Calumet Specialty Products Partners (CLMT) a “buy.”

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