Delek Logistics Acquires Full Control of DCP Midstream for $1.2B

TL;DR

Delek Logistics just bought the other half of DCP Midstream for $1.2B, now owning it 100%.

AI Summary

Delek Logistics Partners, LP announced on September 11, 2024, the completion of its acquisition of the remaining 50% interest in DCP Midstream, LP for approximately $1.2 billion. This transaction consolidates full ownership of DCP Midstream, which is involved in natural gas processing and transportation, under Delek Logistics Partners, LP.

Why It Matters

This acquisition signifies a major consolidation for Delek Logistics, potentially leading to increased operational efficiencies and a stronger market position in the midstream energy sector.

Risk Assessment

Risk Level: medium — The significant financial outlay and integration of a large asset base introduce financial and operational risks.

Key Numbers

• $1.2B — Acquisition Cost (Total amount paid for the remaining 50% of DCP Midstream, LP.)
• 50% — Acquired Stake (Percentage of DCP Midstream, LP acquired in this transaction.)

Key Players & Entities

• Delek Logistics Partners, LP (company) — Registrant and acquirer
• DCP Midstream, LP (company) — Acquired entity
• $1.2 billion (dollar_amount) — Acquisition price
• September 11, 2024 (date) — Date of transaction completion

FAQ

Key Financial Figures

• $230 m — e price for the Purchased Interests was $230 million, subject to customary closing adj
• $160 million — nts, which was paid in a combination of $160 million in cash and $70 million in preferred eq
• $70 million — combination of $160 million in cash and $70 million in preferred equity interests of the Pa
• $49.25 — he Partnership at a conversion price of $49.25 per common unit. The preferred equity i

Filing Documents

• dkl-20240911.htm (8-K) — 38KB
• dkl-ex31xthirdamendedandre.htm (EX-3.1) — 848KB
• dkl-ex101xregistrationrigh.htm (EX-10.1) — 177KB
• dkl-ex991xh2omidstreamclos.htm (EX-99.1) — 7KB
• dkl-20240911_g1.jpg (GRAPHIC) — 77KB
• image_0.jpg (GRAPHIC) — 17KB
• 0001552797-24-000093.txt ( ) — 1590KB
• dkl-20240911.xsd (EX-101.SCH) — 2KB
• dkl-20240911_lab.xml (EX-101.LAB) — 23KB
• dkl-20240911_pre.xml (EX-101.PRE) — 13KB
• dkl-20240911_htm.xml (XML) — 3KB

01 Entry into a Material Definitive Agreement

Item 1.01 Entry into a Material Definitive Agreement. The disclosures set forth in Item 2.01 below are incorporated by reference into this Item 1.01.

01 Completion of Acquisition or Disposition of Assets

Item 2.01 Completion of Acquisition or Disposition of Assets. As previously disclosed on August 7, 2024, Delek Logistics Partners, LP (the "Partnership"), through its subsidiary DKL Neptune Recycling, LLC, entered into a Purchase and Sale Agreement with H2O Midstream Holdings, LLC (the "Seller") to purchase 100% of the limited liability company interests in H2O Midstream Intermediate, LLC, H2O Midstream Permian LLC, and H2O Midstream LLC (the "Purchased Interests"), related to Seller's water disposal and recycling operations in the Delaware Basin in New Mexico (the "Purchase Agreement"). The acquisition of the Purchased Interests contemplated by the Purchase Agreement closed on September 11, 2024. The purchase price for the Purchased Interests was $230 million, subject to customary closing adjustments, which was paid in a combination of $160 million in cash and $70 million in preferred equity interests of the Partnership. The preferred equity interests are convertible into common units representing limited partner interests in the Partnership at a conversion price of $49.25 per common unit. The preferred equity interests were issued to the Seller, and any common units issuable upon conversion of the preferred equity interests will be issued, pursuant to the exemption from securities registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act"), and Rule 506(b) of Regulation D as promulgated by the SEC under the Securities Act. Pursuant to a registration rights agreement (the "Registration Rights Agreement") signed in connection with the Purchase and Sale Agreement, the Company has agreed to file with the SEC a registration statement as soon as practicable but in no event later than forty-five (45) days after the closing to register the resale of the shares of common stock issuable upon conversion of the preferred equity interests. The foregoing description is a summary and is qualified in its entirety by reference to

02 Unregistered Sales of Equity Securities

Item 3.02 Unregistered Sales of Equity Securities. The disclosures set forth in Item 2.01 above are incorporated by reference into this Item 3.02.

03 Material Modification to Rights of Security Holders

Item 3.03 Material Modification to Rights of Security Holders. The disclosures set forth in Item 2.01 above and Item 5.03 below are incorporated by reference into this Item 3.03.

03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. On September 11, 2024, in connection with the closing of the acquisition of the Purchased Interests, the Board of Delek Logistics GP, LLC, the general partner of the Partnership adopted the Third Amended and Restated Agreement of Limited Partnership of Delek Logistics Partners, LP (the "Third Amended and Restated Partnership Agreement"), effective upon adoption. The Third Amended and Restated Partnership Agreement amends and restates the Second Amended and Restated Agreement of Limited Partnership of Delek Logistics Partners, LP to provide for, among other things, the establishment of convertible preferred units representing limited partner interests in the Partnership (the "Preferred Units"), certain preferred distribution and liquidation rights in connection with the Preferred Units and conversion and redemption rights of the holders of the Preferred Units and the Partnership with respect to the Preferred Units. The foregoing description of the Third Amended and Restated Partnership Agreement is not complete and is qualified in its entirety by reference to the full text of the Third Amended and Restated Partnership Agreement, which is filed as Exhibit 3.1 to this Current Report on Form 8-K and is incorporated herein by reference.

01 Regulation FD Disclosure

Item 7.01 Regulation FD Disclosure. On September 12, 2024, the Partnership issued a press release announcing the closing of the acquisition of the Purchased Interests. A copy of the press release is attached to this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference. The information in this Item 7.01 is being furnished, not filed, pursuant to Regulation FD. Accordingly, the information in Item 7.01 of this report will not be incorporated by reference into any registration statement filed by the Partnership under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated by reference. The furnishing of the information in this report is not intended to, and does not, constitute a determination or admission by the Partnership that the information in this report is material or complete, or that investors should consider this information before making an investment decision with respect to any security of the Partnership or any of its affiliates.

01 Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits. (d) Exhibits. 2.1 Purchase and Sale Agreement, dated as of August 2, 2024, by and between H2O Midstream Holdings, LLC and DKL Neptune Recycling, LLC (incorporated by reference to Exhibit 2.1 of the Partnership's Form 8-K filed on August 7, 2024). 3.1 Third Amended and Restated Agreement of Limited Partnership of Delek Logistics Partners, LP, dated September 11, 2024. 10.1 Registration Rights Agreement, dated September 11, 2024, by and between H2O Midstream Holdings, LLC and Delek Logistics Partners, LP. 99.1 Press release issued September 12, 2024. 104 Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.

SIGNATURES

SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: September 13, 2024 DELEK LOGISTICS PARTNERS, LP By: Delek Logistics GP, LLC its general partner /s/ Reuven Spiegel Name: Reuven Spiegel Title: Executive Vice President and Chief Financial Officer (Principal Financial Officer)

View Full Filing

View this 8-K filing on SEC EDGAR