Valero Energy Corp. (VLO), the largest U.S. refiner by processing capacity, plans to sell or spin off its network of fuel stations, a business that may be worth as much as $5 billion.
The board of directors has approved the separation, San Antonio-based Valero said in a statement today. The unit’s value will be improved as a standalone entity, the company said in a statement. Credit Suisse AG is advising the company. Valero rose 5.4 percent to $27.50 at the close in New York, the biggest gain in six weeks.
Customers buy gasoline at a Valero Energy Corp gas station in San Francisco, California. Photographer: David Paul Morris/Bloomberg
Valero’s retail business generates $500 million annually in earnings before interest, taxes, depreciation and amortization, Chairman and Chief Executive Officer Bill Klesse said on a conference call with investors today. The unit’s earnings potential is comparable to other retailers that trade at a multiple of about 10 times Ebitda, Klesse said.
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“The whole business is an extremely solid business,” Klesse said. “We’re up with the very best.” Based on Klesse’s comparison, Valero’s retail segment would be valued at as much as $5 billion, according to Bloomberg calculations.
A lower valuation of five to seven times Ebitda, or $2 billion to $2.8 billion, is possible for Valero’s retail segment, which includes more than a thousand company-owned and branded gasoline and diesel stations in the U.S. and Canada, Cory Garcia, a Houston-based analyst with Raymond James & Associates Inc., said in an e-mail today.
via Valero to Separate Retail Unit Valued Up to $5 Billion – Bloomberg.