HF Sinclair Corporation (NYSE:DINO) made a non-binding proposal letter to acquire remaining 52.8% stake in Holly Energy Partners, L.P. (NYSE:HEP) for $1.04 billion on May 4, 2023. HF Sinclair Corporation entered into a definitive merger agreement to acquire remaining 52.8% stake in Holly Energy Partners, L.P. for approximately $1.5 billion on August 15, 2023. Under the proposal, HF Sinclair proposes to effect the transaction at a fixed exchange ratio of 0.3714 newly issued shares of Common Stock per each publicly held Common Unit. Under the definitive merger agreement, the agreement provides for consideration of both stock and cash in which each holder of Common Units would receive a combination of 0.315 shares of Common Stock and $4.00 in cash, without interest, for each publicly held Common Unit Upon closing of the Proposed Transaction, the Partnership will be a wholly owned subsidiary of HF Sinclair and will no longer be a publicly traded partnership. In the event of termination of agreement under certain circumstances, HEP shall pay to HF Sinclair?s designee an amount in cash equal to $10 million as termination fee and HF Sinclair shall pay the HEP?s designee an amount in cash equal to $20 million as termination fee.

The proposed HF Sinclair transaction is subject to the negotiation and execution of a definitive agreement and conditions customary for a transaction of this type. The completion is subject to the approval of HF Sinclair stockholders and HEP unitholders and the satisfaction of certain customary closing conditions, any waiting period applicable to the transactions contemplated by the agreement under the HSR Act shall have been terminated or shall have expired, the registration Statement shall have become effective under the Securities Act, HF Sinclair Common Stock deliverable to the Limited Partners as contemplated by the agreement shall have been approved for listing on the NYSE. The HF Sinclair Board has unanimously approved the merger agreement and resolved to recommend approval of the merger by stockholders. The HF Sinclair Conflicts Committee has also unanimously approved the merger agreement. The HEP Conflicts Committee and the GP Board also recommended that the HEP Unitholders vote in favor of the merger. The 30-day HSR Act waiting period expired on October 10, 2023. As of November 28, 2023, the transaction was approved by shareholders of HF Sinclair and Holly Energy Partners. The proposed transaction is expected to close in the fourth quarter of 2023. As of November 28, 2023, the transaction is expected to close on December 1, 2023.

Barclays Capital, Inc is acting as financial advisor to HF Sinclair, and Alan J. Bogdanow, Katherine T. Frank, Shane Tucker, Bailey Pham, Jim Meyer, Hill Wellford, Matt Dobbins, Damien Lyster, Sarah Mitchell, Ryan Carney and Ramey Layne of Vinson & Elkins L.L.P. and Richards, Layton & Finger, P.A. are acting as HF Sinclair?s legal advisors. Intrepid Partners, LLC is acting as financial advisor to the conflicts committee of the board of the ultimate general partner of HEP and also delivered a fairness opinion in connection with the merger. Hillary H. Holmes, Tull Florey and Cynthia M. Mabry of Gibson, Dunn & Crutcher LLP and Morris, Nichols, Arsht & Tunnell LLP are acting as the HEP?s Conflicts Committee?s legal advisors. Sean Skiffington and Olivier Souleres of Shearman & Sterling has acted as legal advisor to Barclays Capital financial advisor to HF Sinclair. MacKenzie Partners, Inc. acted as proxy solicitor to HF Sinclair for a fee of $25,000, plus reasonable and customary expenses and fees for any additional services. EQ Shareowner Services acted as transfer agent and registrar to HF Sinclair. HF Sinclair will pay Barclays a fee of $6,000,000 upon completion of the merger. In addition, HF Sinclair has agreed to reimburse Barclays for its reasonable out-of-pocket expenses incurred in connection with the merger and to indemnify Barclays for certain liabilities that may arise out of its engagement. The engagement letter between the HEP Conflicts Committee and Intrepid provides for an opinion fee of $1,000,000, which has been paid to Intrepid by HEP and was earned by Intrepid upon delivery, regardless of the conclusion reached by Intrepid. The Intrepid engagement letter also provides for a financial advisory fee of $500,000, which was paid upon execution of the engagement letter, an announcement fee of $1,500,000, which was paid upon the public announcement of the merger and a transaction fee of $750,000, which becomes payable upon the consummation of the merger.

HF Sinclair Corporation (NYSE:DINO) completed the acquisition of remaining 52.8% stake in Holly Energy Partners, L.P. (NYSE:HEP) on December 1, 2023.