By Tess Stynes
CST Brands Inc. (CST) agreed to acquire the membership interests
of Lehigh Gas GP, the general partner of Lehigh Gas Partners LP
(LGP), for a total consideration of roughly $85 million.
San Antonio-based CST, a retailer of motor fuels and convenience
merchandise, expects the deal will eliminate upfront costs and
market risks of pursuing forming a master limited partner
consisting of CST-only assets through an initial public
offering.
The deal includes $17 million in cash and roughly 2.044 million
shares of CST common stock. CST said the transaction, expected to
close early in the fourth quarter, will create a platform with fuel
distribution and retail operations expertise.
Lehigh Gas Partners Chairman and Chief Executive Joe Topper will
continue as president and CEO of Lehigh Gas Partners and join CST
Brands' board.
Allentown, Penn.-based Lehigh Gas Partners is a wholesale motor
fuels distributor and is affiliated with several major oil brands,
including Exxon Mobil Corp. (XOM), Chevron Corp. (CVX), BP PLC (BP,
BP.LN) and Royal Dutch Shell PLC (RDSA, RDSA.LN).
The transaction doesn't involve any of the common or
subordinated units of Lehigh Gas Partners, which will continue to
operate as a separate, publicly-traded MLP.
Separately, CST Brands's board also authorized the repurchase of
$200 million of the company's shares.
CST Brands and Lehigh Gas Partners plan to provide more details
in a conference call set for Thursday at 10 a.m EDT.
CST shares rose 14% to $38.25 in recent after-hours trading.
Lehigh Gas Partners' units rose 12% to $29.
Write to Tess Stynes at tess.stynes@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires