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Valero's Purchase of Kaneb Approved

June 16, 2005|From Reuters

U.S. antitrust authorities said Wednesday that they had approved Valero LP's acquisition of Kaneb Services and Kaneb Pipe Line Partners after the companies agreed to sell some pipeline and oil terminal assets.

The Federal Trade Commission said the companies agreed to sell assets in Northern California -- Kaneb's terminals in Martinez and Richmond -- as well as in Pennsylvania and Colorado to preserve competition and avoid a potential increase in gasoline and diesel fuel prices.

Valero LP is a master limited partnership that is 46% owned by refiner Valero Energy Corp., based in San Antonio.

FTC competition chief Susan Creighton said the companies' agreement "illustrates the commission's continuing commitment to protecting consumers from higher prices for transportation fuels arising from potentially anti-competitive mergers in this important sector of the economy."

In addition, California Atty. Gen. Bill Lockyer said Valero LP had agreed to build 900,000 barrels of new crude oil storage tanks at one of its refineries in the northern part of the state. He said the additional storage would help stabilize the region's gasoline market.

Valero LP also said management planned to recommend that the company's board increase its annual dividend to $3.42 a share from $3.20 after the transaction closes.

The company said it was confident the assets to be shed can be sold "quickly at a favorable price."

When they announced the deal in November, the companies valued it at $2.3 billion in cash and stock and said it would make Valero LP the nation's largest operator of petroleum storage.

Kaneb is based in Richardson, Texas.

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