Western Refining Inc. (WNR) said Monday it is buying Giant Industries Inc. (GNI) for $1.23 billion in cash, creating the fourth-largest publicly traded independent oil refiner in the United States.

The combined company will have the capacity to handle about 216,000 barrels per day from four refineries. That is about 84 percent more than Western's current capacity.

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Western already has a refinery in El Paso, Texas, where it is based. The deal will give it an East Coast presence with a refinery in Yorktown, Va., and two refineries in northern New Mexico.

In addition to its refineries, Giant Industries, based in Scottsdale, Ariz., owns a crude oil gathering pipeline system based in Farmington, N.M., a fleet of crude oil and finished product truck transports and a chain of retail service station and convenience stores in New Mexico, Colorado and Arizona. It also is the parent company of Phoenix Fuel Co. Inc. and Dial Oil Co., both of which are wholesale petroleum products distributors.

The deal is expected to close in the fourth quarter, pending customary conditions and regulatory approvals.

Under the terms of the deal, Western Refining will pay $83 per share for Giant. That represents a 16 percent premium over Giant's share price of $71.79 at the close of trading Friday.

Western Refining will also assume $275 million in debt in the deal.

Western expects Giant to add to cash flow and per-share earnings immediately following closing.

Western plans to finance the deal with $250 million in existing cash and a $2 billion loan from Bank of America (BAC).

The company plans to continue paying a dividend of 4 cents a share each quarter.

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