Boardroom

An oil refiner controlled by billionaire investor Carl Icahn says it no longer wants to buy Delek US Holdings but is instead using its 15 percent ownership stake to pressure the Brentwood-based company to make major changes to its business.

In a letter sent to the directors of Delek Thursday, CVR Energy President and CEO David Lamp said “Delek desperately needs new strategic direction” and called on the board to cede three board seats to CVR nominees. Among the things Lamp is calling for Delek Chairman and CEO Uzi Yemin to do are:

• Convert two of the company's four refineries to other purposes. CVR contends the facilities in Arkansas and Louisiana are “a waste of company resources” as they’re being used today and is suggesting they become terminals or renewable diesel production centers.

• Sell Delek’s retail business, which comprises about 250 convenience stores in Texas and New Mexico. Delek in 2016 sold its Mapco division, which had about 350 locations at the time, to a Chilean company for more than $535 million

• Stop transferring refining assets to Delek Logistics Partners, its majority-owned master limited partnership, at “values which are not market-based” and are hurting Delek US’ investors.

“We continue to believe Delek’s stock is undervalued and that the company would benefit greatly from a board refreshment and a renewed focus on value enhancing ideas, such as prioritizing free cash flow over growth, monetizing retail and focusing on core refineries while exiting from others,” Lamp wrote in the letter.

CVR was first reported to be interested in buying Delek in 2016. The Delek directors last March adopted a one-year poison pill to temporarily keep at bay their purported suitor.

In a statement late Thursday, Delek officials put up an initial defense of their recent strategies and speeding priorities as well as the company’s governance practices — including pointing out that two of its seven directors have come aboard in the past two years — but also kept very much open the door for discussions with CVR.

“Delek US remains committed to maintaining a diverse board with additive perspectives to provide independent oversight and enhance value for all shareholders,” the company said. “The nominating and corporate governance committee of our board will evaluate any nominees from CVR if and when they are received and make a recommendation in due course.”

Shares of Delek (Ticker: DK) rose more than 5 percent to $20.03 in regular trading Thursday and tacked on nearly 1 percent more after hours. They are up about 10 percent over the past six months thanks to a run from below $10 since late October.

This post originally appeared in our partner publication, the Nashville Post

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