TPG, ACON sell Northern Tier Energy stake for $775 mln UPDATED

• Firms initially invested $200 million in energy company in 2010

• Northern Tier went public last year

• Sale allowed firms to exit final 30-40 percent stakes

TPG, which invested in Northern Tier out of its sixth fund, and ACON declined to comment.The firms initially invested $200 million in 2010, acquiring the assets of St. Paul Park Refining Co and associated assets from Marathon Oil. The firms then formed Northern Tier around the acquired assets.

The firms took Northern Tier public last year in an IPO, selling down parts of their stakes in the process. The agreed sale represented the firms’ exit of their final 30 to 40 percent stakes in the business, the person said.

Western Refining bought a 38.7 percent stake in Northern Tier from the two firms, as well as 100 percent of the general partner that controls the downstream energy company on Nov 12, sister news service Reuters reported on Nov 12.

Northern Tier’s refining business primarily consists of an 89,500-barrels-per-day refinery located in St. Paul Park, Minnesota, near North Dakota’s Bakken shale field.

The refinery is closer to the Bakken than most U.S. refineries and is also well-positioned to receive discounted Canadian crude oil from the big pipeline networks that run through Minnesota.

U.S. refiners typically sell refined products such as gasoline and diesel at prices linked to more expensive European Brent crude, boosting margins for those with access to cheap U.S. shale crude.

Bakken and Canadian crude differentials are expected to be priced at a discount to international and other domestic crudes for at least the next couple of years, Simmons & Co analysts wrote in note to clients.

Western Refining operates the El Paso refinery in Texas and Gallup refinery in New Mexico, with combined refining capacity of about 151,000 barrels per day.

Northern Tier is structured as a master-limited partnership, a dividend-paying investment vehicle that enjoys special tax breaks and is often used by natural resources companies.

UBS Securities LLC was Western Refining’s financial adviser, while Pillsbury Winthrop Shaw Pittman LLP and Davis Polk & Wardwell LLP were its legal counsels.

Barclays and J.P. Morgan Securities LLC served as co-financial advisers to ACON and TPG.

(UPDATED: This story was updated to add details of TPG, ACON’s return on investment)

Sakthi Prasad and Sweta Gopinath are reporters for Reuters News in Bangalore

peHUB editor Chris Witkowsky contributed to this report