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08 01, 2012 by Fuel Fix
San Antonio-based refiner Valero Energy Corp.’s announcement that its net income rose almost 12 percent in the second quarter came with a surprise: It may split its retail business from the rest of the company.
Valero said it is reviewing several ways to separate its retail operations, including a distribution to shareholders, the company said.
A separation of Valero’s retail business “will create operational flexibility within the businesses and unlock value for our shareholders,” CEO Bill Klesse said in a statement. “As independent companies, both retail and the remaining business will be better-positioned to focus on their industry-specific strategies.”
Valero spokesman Bill Day said a separation of Valero’s retail business to shareholders would offer tax advantages to Valero and to shareholders. In a split, the retail operations would be a company that would operate independently from Valero, but the stations would retain the Valero brand, he said.
“That doesn’t mean we’re ruling out a sale,” Day said. “We’re looking at the options that would be best for shareholders.”
The company has hired Credit Suisse Securities LLC to advise it on the possible split.
Valero’s share’s rose more than 7 percent on the news to trade at $28 a share in midmorning trading on the New York Stock Exchange.
Valero said its net income rose in the quarter ended June 30 to $830 million, or $1.50 a share, compared with net income of $743 million, or $1.31 a share, for the year-earlier period.
The showing exceeded analysts’ expectations, as polled by Bloomberg, that Valero would earn $1.43 a share.
Valero’s retail segment reported record high quarterly operating income of $172 million in the second quarter compared with $135 million of operating income for the year-earlier period.
The increase in operating income was mainly due to higher fuel margins and volumes in U.S. retail, Valero said.
Valero’s retail stores are in the United States and Canada.
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