A Nashville-based, Israeli-linked oil refiner and fuel distributor is making preparations to become the newest shipowner in the US Jones Act trades.
New York-listed Delek US Holdings has won investor approval for amendments to its corporate by-laws that will put top management positions and most board seats off limits to non-US citizens. The changes will also restrict foreign citizens from owning more than 24% of company’s shares.
The purpose is to ensure that Delek US and limited partnership subsidiary, New York-listed Delek Logistics, remain eligible to own ships that are qualified to trade between places in the US under the strict protectionist rules of the Jones Act cabotage regime.
But another possible purpose of such a move is to make hostile takeover bids more difficult, and Delek US has recently staved off such a move by notoriously aggressive Carl Icahn.
The company currently owns no ships. But the vertically-integrated downstream and midstream outfit has grown over 20 years by a series of merger and acquisition moves.
Delek US started in convenience stores but now owns four oil refineries, an extensive logistics network in the southern US including pipelines and storage facilities, rail and truck tank fleets, six asphalt terminals, biodiesel facilities, and about 250 retail stores.
Jones Act shipowning looks to be its next move.
“Delek Logistics may in the future acquire certain vessels that bring it within the application of the Jones Act,” Delek US told shareholders in a proxy filing earlier this month.
“Because we are the ultimate parent and general partner of Delek Logistics, the Jones Act citizenship requirements apply to us. The proposed amendment would implement certain safeguards to assist us in maintaining our status as a US citizen.”
The measure could make the company’s stock less attractive to investors and harder to resell, but over 97% of shareholders voted for it.
Delek US holds some 79% of partnership shares in Delek Logistics.
That parent company announced in its recent first-quarter report that it had spent some $64m on stock buybacks to acquire shares from Carl Icahn-led interests and stave off a bid to place a slate of directors associated with Icahn on the company’s board.
Delek US has been contacted for comment but an official was not immediately available before publication of this story.
The company was founded in 2001 by Israeli billionaire Yitzhak Tshuva’s Delek Group, but the Israeli and US companies are now connected in name only. The founder sold down its shareholding as it specialised as an oil and gas upstream player.
Now a Fortune 500 company, the Nashville-based Delek US is headed by Israeli-born chairman and chief executive officer Uzi Yemin, who was originally seconded from the Israeli founder in 2001.
Yemin, 53, is now in the process of stepping back to a role as executive chairman. He is to be succeeded as chief executive officer by Avigal Soreq, a former Dalek US executive who now serves as chief executive officer of Israeli state-owned El Al Airlines.
The founding Delek Group was originally controlled by Israel’s Recanati family before Tshuva bought it in 1998. Members of the Recanati family were coincidentally also founders of another Jones Act shipowner, Overseas Shipholding Group.
