Delek Logistics Partners, LP (NYSE: DKL) has announced the successful completion of the acquisition of H2O Midstream, a portfolio company of EIV Capital, LLC. The total consideration for the acquisition amounts to $230 million, comprising $160 million in cash at closing, excluding customary closing adjustments, and $70 million of convertible preferred redeemable equity. The transaction has been financed through a combination of cash and debt financing.
The acquisition of H2O Midstream is aligned with Delek Logistics' core strategy of providing a full midstream service solution to its existing and third-party customers in the prolific Permian Basin. The operations of H2O Midstream, which include water gathering, transportation, recycling, storage, and disposal services in the Midland Basin in Texas, significantly overlap with Delek Logistics' existing Midland, Texas operations. The acquisition also presents opportunities for extracting significant synergies through cost optimization and cross-product sales.
Delek Logistics Partners, LP, a midstream energy master limited partnership headquartered in Brentwood, Tennessee, owns assets and joint ventures primarily located in and around the Permian Basin, the Delaware Basin, and other select areas in the Gulf Coast region. With the addition of H2O Midstream, Delek Logistics now provides gathering, transportation, recycling, storage, water disposal, and recycling services.
As a result of the acquisition, there will likely be changes in the financial metrics and operational performance of Delek Logistics Partners, LP, which could be reflected in future financial reports and disclosures. The market has reacted to these announcements by moving the company's shares -0.6% to a price of $41.99. For more information, read the company's full 8-K submission here.
