
2.	ACQUISITIONS

Acquisitions of Refineries

The acquired refining and marketing businesses as discussed below involve the production and marketing of refined petroleum products. These acquisitions are consistent with our general business strategy and complement our existing refining and marketing network.

Meraux Acquisition

On October 1, 2011, we acquired the Meraux Refinery and related logistics assets from Murphy Oil Corporation for an initial payment of $586 million, which was funded from available cash. This acquisition is referred to as the Meraux Acquisition. The Meraux Refinery has a total throughput capacity of 135,000 barrels per day and is located in Meraux, Louisiana.

In the fourth quarter of 2011, we recorded an adjustment related to inventories acquired that reduced the purchase price to $547 million. The assets acquired and liabilities assumed in the Meraux Acquisition were recognized at their acquisition-date estimated fair values, pending the completion of an independent appraisal and other evaluations, and are as follows (in millions):



Inventories	$	219
Property, plant and equipment	320
Deferred charges and other assets, net	9
Other long-term liabilities	(1		)
Purchase price	$	547

Pembroke Acquisition

On August 1, 2011, we acquired 100 percent of the outstanding shares of Chevron Limited from a subsidiary of Chevron Corporation (Chevron), and we subsequently changed the name of Chevron Limited to Valero Energy Ltd. Valero Energy Ltd owns and operates the Pembroke Refinery, which has a total throughput capacity of 270,000 barrels per day and is located in Wales, U.K. Valero Energy Ltd also owns, directly and through various subsidiaries, an extensive network of marketing and logistics assets throughout the U.K. and Ireland. On the acquisition date, we initially paid $1.8 billion from available cash, of which $1.1 billion was for working capital. Subsequent to the acquisition date, we recorded an adjustment to working capital (primarily inventory), resulting in an adjusted purchase price of $1.7 billion, as outlined below. This acquisition is referred to as the Pembroke Acquisition.

The assets acquired and liabilities assumed in the Pembroke Acquisition were recognized at their acquisition-date estimated fair values, pending the completion of an independent appraisal and other evaluations, and are as follows (in millions):



Current assets, net of cash acquired	$	2,214
Property, plant and equipment	804
Deferred charges and other assets, net	32
Intangible assets	23
Current liabilities, less current portion of debt and capital lease obligations	(1,287		)
Debt and capital leases assumed, including current portion	(12		)
Other long-term liabilities	(78		)
Noncontrolling interests	(5		)
Purchase price, net of cash acquired	$	1,691

The acquired intangible assets are subject to amortization and have weighted-average useful lives of 10 years. These acquired intangible assets have been assigned to the intangible asset classes of trade names and supply agreements. These acquired intangible assets have no residual value.

In connection with the Pembroke Acquisition, we acquired an 85 percent interest in Mainline Pipelines Limited (MLP). MLP owns a pipeline that distributes refined products from the Pembroke Refinery to terminals in the U.K. In the fourth quarter of 2011, we acquired the remaining 15 percent interest in MLP.

Other Disclosures

In conjunction with the Meraux and Pembroke Acquisitions, neither goodwill nor a gain from a bargain purchase was recognized, and no significant contingent assets or liabilities were acquired or assumed.

The statement of income includes the results of operations of each of the acquisitions from the dates of their acquisition. Actual operating revenues, income from continuing operations, and acquisition-related costs associated with the Meraux and Pembroke Acquisitions included in our statement of income for the year ended December 31, 2011 were as follows (in millions):



	Meraux Acquisition			Pembroke Acquisition
Operating revenues	$	1,343		$	7,522
Loss from continuing operations	(74		)	(10		)
Acquisition-related costs (included in general and administrative expenses)	2			27

The acquisition-related costs shown above are not included in the loss from continuing operations of the respective acquisitions.

The following unaudited pro forma financial information (in millions, except per share amounts) presents our results assuming the Meraux and Pembroke Acquisitions occurred on January 1, 2010. The pro forma financial information is not necessarily indicative of the results of future operations.



	Year Ended December 31,
	2011		2010
Operating revenues	$	142,109	$	99,824
Income from continuing operations attributable to Valero stockholders	2,071		953
Earnings per common share from continuing operations – basic	3.66		1.68
Earnings per common share from continuing operations – assuming dilution	3.64		1.68

Acquisitions of Ethanol Plants

The acquired ethanol businesses as discussed below involve the production and marketing of ethanol and its co-products, including distillers grains. The operations of our ethanol business complement our existing clean motor fuels business.

ASA and Renew Assets

In December 2009, we signed an agreement with ASA Ethanol Holdings, LLC to buy two ethanol plants located in Linden, Indiana and Bloomingburg, Ohio and made a $20 million advance payment towards the acquisition of these plants. In January 2010, we completed the acquisition of these plants, including certain inventories, for total consideration of $202 million.

Also in December 2009, we received approval from a bankruptcy court to acquire one ethanol plant located near Jefferson, Wisconsin from Renew Energy LLC and made a $1 million advance payment towards the acquisition of this plant. We completed the acquisition of this plant, including certain receivables and inventories, in February 2010 for total consideration of $79 million.

VeraSun Assets

In the second quarter of 2009, we acquired seven ethanol plants and one site under development from VeraSun Energy Corporation for $556 million. The ethanol plants are located in Charles City, Fort Dodge, Hartley, and Albert City, Iowa; Aurora, South Dakota; Welcome, Minnesota; Albion, Nebraska; and the site under development is located in Reynolds, Indiana.