DALLAS —Refinery operators Holly Corp. and Frontier Oil Corp. are combining in an all-stock deal valued at nearly $3 billion.
Both companies said Tuesday that the deal will create the most profitable independent U.S. refiner on a per barrel basis. The new company will have a refining capacity of more than 440,000 barrels per day across five refineries.
Based on Frontier's number of shares outstanding, the transaction is valued at $2.85 billion.
Frontier Oil operates a refinery in El Dorado.
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Analysts had been expecting the industry to consolidate after the business rebounded last year and made refining assets attractive to prospective buyers. Refineries that had struggled to pass on high oil prices during the recession started to see profits surge last year as demand grew for gasoline, diesel and other fuels.
Frontier shareholders will get 0.4811 Holly shares for each Frontier share they own, and Houston-based Frontier plans to chip in a special dividend worth 28 cents per share.