Valero Pops on Convenience Store Brands Spin-Off Debut

Michael Teague |

Shares for Valero Energy (VLO) were up more than 4.6 percent on Thursday to $37.02 as the company’s plan to spin off its convenience-store business into a separate publicly traded entity became official.

CST Brands Inc. (CST) is the name and ticker symbol of the new company that began trading today. It makes its debut on the market as North America’s second largest publicly traded convenience retailer. 2012 revenue for CST Brands alone was approximately $13 billion.

The move comes as Valero’s first quarter earnings report from Tuesday showed the company bringing in a profit after Q1 2012 was hampered by costs of some $1.09 per share, resulting primarily from trouble at one of its refineries in Aruba.



For the first quarter of 2013, Valero earned $654 million or $1.18 per share on revenue of $35.17 billion, versus the prior year period during which the company lost $432 million, or $0.78 per share on revenue of $35.17 billion. The numbers are a nice leap over analyst expectations of $0.98 per share earnings on revenue of $30.41 billion.

Valero said that by April, its shareholders will receive one share of the new company for each nine shares of Valero they currently hold. The company also said that it is in the process of deciding whether or not to spin-off its logistics, storage, and transportation business into a master limited partnership (MLP).

MLPs have been a preferred means for oil companies to manage midstream operations, as partnerships circumvent the relatively higher corporate taxes. Furthermore, the midstream energy business relies more on service fees for transportation and storage rather than the at times unpredictable price of oil.

During its first day of trading, shares for CST Brands were down 2.12 percent to $29.56.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
VLO Valero Energy Corporation 66.75 0.56 0.85 4,252,098
CST CST Brands Inc. 48.18 -0.02 -0.04 333,082
MHR Magnum Hunter Resources Corp n/a n/a n/a 0

Comments

Emerging Growth

Lomiko Metals Inc.

Lomiko Metals Inc is an exploration stage company. It is engaged in the acquisition, exploration and development of resource properties. Its projects include Vines Lake project and Quatre - Milles…

Private Markets

Santo Diablo Mezcal

Santo Diablo Mezcal has been created to capitalize on a boom sector of the beverage market currently full of many small unmemorable products by producing one sexy, household, easily recognizable…

MyForce, Inc.

As parents, we constantly worry about the safety of our loved ones. The media bombards us with incidents from across the nation school shootings, frequent assaults on campuses, and crimes…