Valero Energy Corp. on Thursday approved the spinoff of its retail business, effective May 1, San Antonio Express News reported.
San Antonio-based Valero’s board of directors approved a plan to distribute 80% of the outstanding shares of the new company, CST Brands Inc., to holders of Valero’s common stock.
The move makes CST Brands one of the largest independent retailers of motor fuels and convenience merchandise in the U.S. and eastern Canada, with nearly 1,900 sites and almost 12,000 employees.
Valero shareholders will receive one share of CST Brands common stock for every nine shares of Valero common stock held as of 4 p.m. CDT on April 19, San Antonio Express News reported.
A private letter ruling from the Internal Revenue Service acknowledged that distribution of CST Brands’ common stock will be treated as a tax-free distribution to Valero shareholders.
After the distribution of stock, CST Brands will be an independent, publicly traded company, and Valero will own 20% of its common stock. Valero expects to retain its equity interest in CST Brands for six months and then sell its shares.