updated 8/28/2006 9:33:51 AM ET 2006-08-28T13:33:51

Western Refining Inc. confirmed Monday it agreed to acquire Giant Industries Inc. for $1.23 billion in cash, creating the fourth-largest publicly traded independent oil refiner in the United States.

Under the terms of the deal, which includes the assumption of $275 million in debt, 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.

The combined company will have crude oil throughput capacity of about 216,000 barrels per day from four refineries. 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.

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

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

Copyright 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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