From InsiderScore: Two directors at Western Refining (WNR) stepped up with their second insider purchases this year after the refiner agreed to buy a rival. Director Carin Marcy Barth bought 8K shares at an average price of $24.46 for herself and a number or trusts on August 30th.
The buy brought her total direct ownership to 8K shares and her indirect ownership to 10.4K shares spread among five separate trusts. She previously was buying shares in March, picking up 5.7K shares for herself and three of the trusts in the $17.42 to $17.44 range.
Barth has served as the CFO of the Department of Housing and Urban Development following her selection by President George W. Bush in July 2004 in a recess appointment. She was formerly the president of Houston-based private equity investment firm LB Capital, which she co-founded in 1987.
Also picking up shares on the 30th was Director Francis L Frederick, who took down 40.2K shares at $23.94 to raise his total to 100K shares. Frederick was previously buying in May, picking up 45K shares at $17.92. He is the chairman and CEO of Prime Capital Management and Francis Properties, companies that are principally engaged in family investments.
Directors at WNR receive a $40K annual fee plus $1.5K for each board meeting they attend. They also receive $5K for each committee they chair. Non-employee directors are also granted $40K worth of restricted stock upon joining WNR's board, and are awarded the same amount annually.
On Monday, August 28th, WNR announced it was acquiring Giant Industries (GI) for $1.23 billion in cash plus the assumption of $275 million in debt. The deal will create the fourth-largest publicly traded independent oil refiner in the U.S. with the capacity to refine about 216K barrels of oil per day. The acquisition also increases the number of WNR's refineries from one to four, and increases its capacity by 86%. WNR is paying a 16% premium over GI's closing price the previous trading day before the announcement.
Western's President and Chief Executive Officer Paul Foster lauded the deal, saying: "This transaction is a win for our shareholders, employees, customers, and the communities we serve. With GI, we will significantly increase our refining capacity in fast-growing, high-demand areas and gain an immediate footprint in new, complementary businesses. With this enhanced growth platform and Western's continued financial strength, we will be better able to capitalize on the strong fundamentals in our industry and drive shareholder value."
Analysts were generally positive on the deal. Merrill Lynch analyst Christopher Moore praised the deal, saying: "The Giant acquisition gives WNR increased exposure to one of the key fundamental strengths behind our 'buy' recommendation: premium, Southwest niche refining margins." Harry Chernoff of Pathfinder Capital Advisors, meanwhile, noted that WNR acquired "quality assets at a reasonable price."
Even though he recently downgraded the stock, Bank of America analyst Philippe Lanier also came out positive on the deal. In a note to clients, he wrote: "The synergies between WNR in El Paso and neighboring GI in Arizona are compelling and the current offer on the table does provide a strategic fit for both companies relative to competing bids." Lanier lowered his rating on WNR from "buy" to "neutral" following its Q2 earnings report announced on August 8th.
WNR went public earlier this year on January 19th raising $383 million by offering 22.5 million shares. The company jumped over 9% its first day of trading, rising from its $17 offering price, which was at the high end of its $15-$17 range. After a strong start, the stock fell to a low of $14.33 on February 14th, before rallying to a high of $27.68 on August 9th. The high came immediately following a blowout quarter, in which the company drilled past analyst EPS estimates by 35 cents. For the second quarter ended June 30th, WNR posted earnings of $86.5 million, or $1.29 a share, a 38% year-over-year increase on revenue of $1.15 billion, which was up 46% from a year ago.
Worth Noting: Both Barth and Francis have served on the Texas Tech University Board of Regents, with Francis currently serving as chairman.