Delek Logistics Expands into Water Recycling with $285 Million Acquisition

Delek Logistics Partners targets growth in sustainable operations with a strategic move into water recycling.

December 13, 2024

Key Highlights of the Deal

Delek Logistics Partners, LP announced a major acquisition of Gravity Water Intermediate Holdings LLC for $285 million, marking a strategic expansion into water recycling and disposal operations. The deal involves Gravity Water’s extensive presence in the Permian Basin and the Bakken, two pivotal regions for U.S. energy production.

The transaction includes a purchase price of $285 million, structured with both cash payments and equity contributions. As part of the arrangement, Delek Logistics has already paid a deposit of $22.8 million, which will be applied to the final purchase price at closing.

The acquisition is expected to close in early 2025, contingent on standard regulatory and transactional conditions being met. The agreement also includes detailed representations, warranties, and indemnification clauses to safeguard both parties from potential risks.

Structure and Strategic Rationale

The acquisition aligns with Delek Logistics’ long-term strategy to integrate more sustainable practices into its operations. The company plans to pay for the deal using a combination of cash and 2.18 million common units representing limited partnership interests. These equity units will be issued under specific securities exemptions and will be registered shortly after the transaction is finalized.

Delek’s move into water recycling and disposal underscores its commitment to environmental sustainability while enhancing its capabilities in supporting energy production logistics. By leveraging Gravity Water’s established infrastructure, the company aims to address growing environmental concerns and operational efficiencies within the energy sector.

Future Integration Plans

Following the acquisition’s completion, Delek intends to integrate Gravity Water’s assets into its existing operational framework. The focus will be on maximizing synergies and ensuring a smooth transition. The deal sets the stage for Delek to expand its logistics capabilities while contributing to broader industry efforts to adopt greener practices.

With the regulatory approvals process already underway, Delek anticipates the acquisition will proceed as scheduled, positioning the company for growth in 2025 and beyond.