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CVR Energy says not interested in buying Delek, proposes to replace board nominees

·1 min read

Jan 14 (Reuters) - U.S. refiner CVR Energy Inc said on Thursday it was not interested in buying peer Delek US Holdings Inc and proposed to replace three Delek board nominees with its own.

CVR, which owns about 15% of Delek and is its largest stockholder, said it would instead focus on devoting capital to internal higher-return projects, according to a regulatory filing, which cited a letter to Delek from CVR Energy CEO David Lamp. (https://bit.ly/2XG01NR)

Lamp cited the dramatic changes in the industry since it started buying shares of Delek as one of the reasons it was not pursuing an acquisition.

Lamp, however, said CVR continues to believe Delek's stock is undervalued and the company would benefit by prioritizing free cash flow over growth, and focusing on core refineries while exiting from others.

Delek did not immediately respond to a request for comment.

Oil refineries have been facing a wave of closures due to plateauing fuel demand, tightening environmental rules and increased competition.

CVR, majority owned by billionaire investor Carl Icahn, urged Delek to cease refining operations at the Krotz Springs and El Dorado refineries in the U.S. and convert them to terminals, for renewable diesel production or other purposes.

Delek's shares halved in 2020, while CVR's stock fell 63%. (Reporting by Arundhati Sarkar in Bengaluru; Editing by Shounak Dasgupta)