Valero Energy Corporation (NYSE: VLO) said on Friday that its board has approved the plan to spin off retail business, CST Brands, as the Company shifts its focus on key strategic areas.
Accordingly, San Antonio TX based Company, will give its shareholders 80% of its equity in CST Brands.
That means, shareholder will get one share of CST Brands for every nine shares held in Valero as of April 19.
The allotment of shares is likely to be take place on May 1. Following the spinoff, CST Brands will trade at the NYSE under a ticker “CST”.
The Company said that it will retain 20% of its stake in CST Brands for around six months after the allotment of shares to investors and then look to divest its stake.
The decision to spin off its retail unit was taken last year and now the world’s largest independent refiner is considering selling its assets in California following the purchase of refineries in the U.K. and Louisiana, in the previous year.
In order to enhance shareholders’ value, several energy companies have been spinning off. Just last year, in what was one of the biggest spin off in the energy sector, Conoco Phillips spun off its refining business to form refiner Phillips 66.
“We believe the separation of our retail business by way of a tax-efficient distribution to our shareholders will create operational flexibility,” said Valero’s CFO, Mike Ciskowski in a statement to investors and analysts, last July.
In the fiscal fourth quarter, Valero’s earnings climbed to a seven-year high as the Company benefitted from crude oil production boom in North America, leading it to stop buying expensive sweet crude from international markets.
Shares edged up 1.30% during normal trading hours on Friday. The Company is scheduled to release its fiscal first quarter results on April 30 before the morning bell.
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