In connection with the adoption of the Rights Agreement, a dividend distribution of one Right on each outstanding share of Delek common stock will be payable to shareholders of record on 30 March 30
Delek's refining assets has a combined nameplate crude throughput capacity of 302,000 barrels per day. (Credit: SatyaPrem/Pixabay.)
Delek US Holdings, Inc. (NYSE: DK) (“Delek”) announced today that its Board of Directors (the “Board”) has unanimously resolved to adopt a limited duration shareholder rights agreement (the “Rights Agreement”) to protect shareholder interests and maximize value for all shareholders.
The Board resolved to adopt the Rights Agreement following the announcement by Icahn Enterprises L.P., CVR Energy, Inc. and their affiliates on March 19, 2020 that they have purchased 14.86% of the outstanding shares of Delek and intend to discuss a potential transaction involving Delek and CVR Energy, Inc. In connection with the adoption of the Rights Agreement, a dividend distribution of one Right on each outstanding share of Delek common stock will be payable to shareholders of record on March 30, 2020.
Uzi Yemin, Chairman, President and Chief Executive Officer of Delek stated, “Our Board and management are always open to exploring options that deliver increased value to shareholders including potential business combinations. We appreciate CVR’s investment in our company and we look forward to having a discussion about potential opportunities. Given the fact that Delek’s current share price does not reflect the company’s intrinsic long-term value due to the extreme dislocation caused by the COVID-19 crisis and low commodity prices, we have no choice but to take action to prevent a creeping change of control without a premium and on terms that would not deliver sufficient value for all shareholders.”
The Rights Agreement is similar to plans adopted by other public companies and would not prevent a combination of Delek with another business. The Rights Agreement is intended to protect shareholder interests by reducing the likelihood that any entity, person or group is able to gain control of Delek through open market accumulation without paying all shareholders an appropriate control premium or providing the Board sufficient opportunity to make informed judgments and take actions that are in the best interests of all shareholders. The Rights Agreement applies equally to all current and future shareholders and is not intended to deter offers that are fair and otherwise in the best interests of the Company’s shareholders.
The Rights Agreement has an expiration date in 12-months and the Board will consider whether to terminate the Rights Agreement earlier than such date if warranted.
The Rights Agreement would be exercisable only if a person or group acquires 15% or more of Delek’s outstanding common stock, subject to certain exceptions. In that situation, each holder of a preferred share purchase right (a “Right”) under the Rights Agreement (other than the acquiring person, whose Rights will become void and will not be exercisable) will be entitled to purchase additional shares of Common Stock at a discount. In addition, if Delek is acquired in a merger or other business combination after an unapproved party acquires more than 15% of the Common Stock, each holder of a Right would then be entitled to purchase shares of the acquiring company’s stock at a discount. The Board, at its option, may exchange each Right (other than Rights owned by the acquiring person that have become void) at an exchange ratio of one share of Common Stock per outstanding Right, subject to adjustment. The Board will be entitled to redeem the Rights at $0.001 per Right at any time before the triggering threshold is crossed.
Under the Rights Agreement, certain derivative positions are treated as beneficial ownership of the number of shares of the Company’s common stock equivalent to the economic exposure created by such derivative position whether or not such interests are considered to constitute beneficial ownership under Regulation 13D of the Securities Exchange Act of 1934.
Persons or groups that beneficially own 15% or more of outstanding Common Stock prior to Delek’s announcement of its adoption of the Rights Agreement shall not cause the Rights to be exercisable until such time as those persons or groups become the beneficial owner of any additional shares of Common Stock. Additional information regarding the Rights Agreement shall be contained in a Form 8-K to be filed by Delek with the U.S. Securities and Exchange Commission.
Sidley Austin LLP is acting as legal counsel to Delek.
Source: Company Press Release