8-K/A: Delek Logistics Partners Completes Acquisition of Gravity Water Intermediate Holdings LLC

Delek Logistics Partners finalizes the acquisition of Gravity Water Intermediate Holdings LLC for $301.2 million, enhancing its water midstream solutions.

Summary

• Delek Logistics Partners, LP acquired 100% of Gravity Water Intermediate Holdings LLC on January 2, 2025.
• The purchase price was $301.2 million, consisting of $209.3 million in cash and 2,175,209 common units of Delek Logistics Partners.
• The acquisition was funded through incremental borrowings on the Partnership's revolving credit facility.
• Pro forma financial statements combine Delek US Holdings, Inc. and Gravity as if the acquisition occurred on January 1, 2023, for the statement of income, and September 30, 2024, for the balance sheet.
• The pro forma adjustments include fair value adjustments to property, plant, and equipment and intangible assets, as well as adjustments to interest expense and income taxes.

Sentiment

Score: 7

Explanation: The document is factual and reports on a completed acquisition. The sentiment is neutral to slightly positive, as the acquisition is expected to be strategically beneficial for Delek Logistics Partners.

Positives

• The acquisition expands Delek Logistics Partners' water midstream solutions.
• The pro forma statements provide insight into the combined financial performance of Delek and Gravity.
• The acquisition is expected to be accretive to Delek Logistics Partners' earnings.

Negatives

• The acquisition required incremental borrowings, increasing Delek Logistics Partners' debt.
• The pro forma statements are based on preliminary estimates and assumptions, which may differ from actual results.
• Integration of Gravity's operations may present challenges.

Risks

• The pro forma financial information is based on estimates and assumptions that may not materialize.
• Integration of Gravity's operations may be more complex or costly than anticipated.
• Changes in the oil and gas industry could impact the performance of the combined entity.
• The final purchase price allocation may differ materially from the preliminary allocation.

Future Outlook

The document provides pro forma financial information to illustrate the potential impact of the acquisition on Delek US Holdings, Inc.'s financial position and results of operations. The actual results may differ materially from the pro forma information.

Industry Context

The acquisition reflects a trend of consolidation in the midstream sector, as companies seek to expand their service offerings and geographic reach. Water midstream services are becoming increasingly important in the oil and gas industry due to the growing focus on water management and recycling.

Comparison to Industry Standards

• Comparable acquisitions in the midstream sector often involve similar multiples of EBITDA.
• The purchase price of $301.2 million suggests a valuation in line with industry averages for water midstream businesses.
• Delek's strategy aligns with other midstream companies seeking to diversify their service offerings.

Stakeholder Impact

• Shareholders of Delek Logistics Partners will see a change in the company's asset base and potential earnings.
• Employees of Gravity Water Intermediate Holdings LLC will become part of the Delek organization.
• Customers of both companies may experience changes in service offerings and pricing.

Next Steps

• Finalize the purchase price allocation.
• Integrate Gravity's operations into Delek Logistics Partners.
• Realize synergies and cost savings from the acquisition.

Key Dates