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What: Shares of Tesoro
So what: Tesoro is buying BP's California oil refinery and 800 gas stations for $1.8 billion, plus about $1.3 billion for inventory. According to analysts, the company is paying below market value, partly because California is a difficult operating environment with very strict environmental regulations.
Now what: Management expects the deal to be immediately accretive to earnings and expects it can save $250 million per year through synergies with its other plants. At the reduced price, the company should get a nice boost in earnings for very little cost. I think this deal can continue to drive earnings, and long term this will be a big catalyst for the stock.
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Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.
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