Battling volatility through size,

Frontier Oil


agreed to acquire fellow refiner

Holly Corp.


for $450 million of cash and stock, or about $28.96 a share.

The pact will result in a combined firm based in Houston with five refineries and capacity of more than 260,000 barrels a day. The boards of both companies approved the transaction, which is expected to close in the third or fourth quarter.

Frontier Chief Executive James Gibbs will be head the combined company as CEO, while Holly Chairman Lamar Norsworthy will keep that title with the combined company.

Frontier shares closed Friday at $17.85. Holly closed at $22.10.