Valero Buying Premcor

Valero (VLO Quote) agreed to acquire Premcor (PCO Quote) for $6.9 billion in cash and stock.

The deal, which offers Premcor holders a 20% premium to the average trading price of their stock over the last month, will create North America's largest oil refiner. The combined company would have daily capacity of 3.3 million barrels and annual revenue of $70 million.

"This transaction is one of the largest and most strategic acquisitions in Valero's history," said Valero chief Bill Greehey. "We are acquiring several very strategic refineries for significantly less than their combined replacement value, and we'll be improving the profitability of these plants by capturing synergies, improving their reliability and yields, and increasing their capacities." ...