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Friday, July 14, 2006

IPO Spin-Off Alert: Another Valero

Stock Tickers: VEH, VLO, VLI

Valero GP Holdings LLC (VEH) has priced its IPO of 17.25 million units at $22.00 per share. That is actually at the lower-end of the $22.00 to $24.00 projected pricing range. This is of course being sold by Valero Energy (VLO), and the GP unit owns the general partner of the pipeline systems operator Valero Energy Corp (VLI).

This represents roughly a 40% stake in the float. The syndicate Group is huge. Lehman acted as the lead manager; with co-managers Citigroup, Goldman Sachs, Morgan Stanley, RBC Capital, UBS, A.G.Edwards, Wachovia, Credit Suisse, Deutsche Bank, J.P.Morgan, and others.

This should imply a market cap of just under $1 billion at roughly $935 million. The company is quite profitable. Valero Energy (VLO) is up 0.9% in pre-market trading,but that jump may be tied more to oil prices than this spin-off. VLO has a market cap of $39+ billion.

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