Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
So what: Tesoro is buying BP's California oil refinery and 800 gas stations for $1.8 billion, plus about $1.3 billion for inventory. According to analysts, the company is paying below market value, partly because California is a difficult operating environment with very strict environmental regulations.
Now what: Management expects the deal to be immediately accretive to earnings and expects it can save $250 million per year through synergies with its other plants. At the reduced price, the company should get a nice boost in earnings for very little cost. I think this deal can continue to drive earnings, and long term this will be a big catalyst for the stock.
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The article Why Tesoro's Shares Jumped originally appeared on Fool.com.
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