What: Shares of PBF Energy Inc (NYSE:PBF) jumped more than 16% today after the company announced it was acquiring Chalmette Refining, which is a joint venture that's owned by ExxonMobil (NYSE:XOM) and Venezuela's PDVSA. PBF Energy is paying $322 million for the joint venture, which owns the Chalmette Refinery in Louisiana along with related logistics assets.
So what: In acquiring the 189,000 barrel a day Chalmette Refinery, PBF Energy will boost its total throughput capacity by 35% to 725,000 barrels per day. Moreover, the deal is expected to boost the company's earnings by 20% next year, which is very meaningful earnings accretion for the company.
Further, the related logistics assets include ownership interests in three pipelines, crude and petroleum product storage facilities, a marine terminal, and a clean products truck rack, all of which are attractive MLP assets. These assets could eventually be dropped down into the company's MLP PBF Logistics LP (NYSE:PBFX), which is why that company's units are also rallying double digits on the news.
Now what: This is a very meaningful acquisition for PBF Energy as the deal sharply increases the company capacity and its earnings. Further, the deal also includes several compelling MLP-qualifying assets that PBF Energy could sell down to PBF Logistics in a move that could create value for investors in both companies. Overall, the acquisition certainly fits well within the company's growth by acquisition strategy.
Matt DiLallo has no position in any stocks mentioned. The Motley Fool owns shares of ExxonMobil. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.