Koch subsidiary Flint Hills Resources to buy PetroLogistics for $2.1 bn

Flint Hills Resources, a subsidiary of Koch Industries, yesterday struck a deal to buy propylene maker PetroLogistics, for $2.1 billion in cash, including debt assumption.

The deal would be Flint Hills biggest acquisition to date after it purchased the US chemical business of Huntsman Corporation in 2007 for $415 million.

Flint Hills will pay $14 in cash to minority shareholders of PetroLogistics who own 27 per cent of the company, while a group of shareholders who control the remaining 73 per cent, will get $12 per share.

At $14 a share, the offer represents a premium of 8 per cent to PetroLogistics' Tuesday closing stock price.

The deal has been approved by the boards of both companies and Lindsay Goldberg LLC, York Capital Management, PetroLogistics' executive chairman David Lumpkins and president and CEO Nathan Ticatch, who own 73 per cent stake have approved the transaction.

PetroLogistics is a major producer of propylene with operations near the Houston Ship Channel. 

The Houston, Texas-based company owns and operates the only propane dehydrogenation facility in the US, and its plant is among the largest of its kind in the world. The facility began operations in 2010 and has an annual production capacity of approximately 1.45 billion pounds. 

Propylene is one of the basic petrochemical building blocks that is used in the manufacture of a variety of end products, including paints, coatings, building materials, clothing, automotive parts, packaging and a range of other consumer and industrial products.

Flint Hills is a leading refining, chemicals and biofuels company with operations primarily in Texas and the Midwest. 

Flint Hills market products such as gasoline, diesel, jet fuel, ethanol, biodiesel, olefins, polymers and intermediate chemicals, as well as base oils and asphalt.  T

Flint Hills operates refineries in Minnesota and Texas, with a combined crude oil processing capacity of approximately 600,000 barrels per day.

Its petrochemical business includes production facilities in Illinois, Michigan, and Texas.