|
Back to issue home page
February, 2008
Crude Control
America's auto-fixation provides a pipeline to profit for Delek US Holdings
By Alexei Smirnov
Uzi Yemin belongs to the rare breed of immigrant who can get away with poking fun at American
culture—in front of a Rotary Club audience, no less—while at the same time reaping profits from the
very subject of his jokes. Six years into his U.S. career, Yemin continues to marvel at America's
car-centric lifestyle. "People here don't drive cars, they drive trains," he says during this late
November interview, echoing the sentiments he shared with enamored Nashville Rotary Club members a
couple of weeks prior. All quipping aside, this is exactly why Yemin came to the States in 2001 at
the behest of Delek Group Ltd., a publicly traded Israeli conglomerate with holdings that span
energy, insurance, real estate and auto imports. At age 32, Yemin was charged with finding U.S.
investment opportunities as president and CEO of Delek US Holdings. After surveying roughly six
possible acquisition targets, Yemin and team settled on the assets of Mapco Express. They liked
Nashville's demographics, its growing suburbs and the 18-inch-wide connection to the Colonial
Pipeline—built 40 years ago to siphon fuel to Middle Tennessee from the Gulf Coast via
Chattanooga—that is barely keeping up with demand. Delek Group paid $40 million in 2001 for 198
convenience stores in Nashville and Memphis, and 36 convenience stores in Virginia. One year into
Yemin's leadership, Delek US Holdings reached $550 million in sales, all the while acquiring more
stores and looking to expand beyond the convenience store niche. In 2005, Delek bought a crude oil
refinery in Tyler, Texas. A year later, the company held a $140 million IPO, listing on the New York
Stock Exchange, paying off debt and arming for further moves.
"From the moment crude oil is out of the ground, we want to be in that business: refine it, ship it,
deliver it and sell it in our stores," Yemin says. Though he can come across relaxed, even
nonchalant, in private conversation, as a businessman, Yemin is known for his intense management
style, which was undoubtedly honed in the Israeli armed forces. ("I trained soldiers how to fight,
spent some time in
exotic places like the Gaza strip, West Bank and Lebanon," Yemin says.)
Lately, when he's not trying to meet and exceed shareholders' expectations—Delek's shares were
sloping downward in December to $17.86, within the 52-week range of $14.82 and $30.77—Yemin is busy
fielding questions about the future price of crude. In 2005, Delek bought inventory of two million
barrels of oil at $50 a barrel. With market prices reaching $100 per barrel of crude, it would
appear that the company's analytics division in its new Brentwood headquarters is earning its pay.
With 800 vehicles per 1,000 U.S. residents, an unwavering love of SUVs and the aging infrastructure
of pipelines, Yemin sees ample room to grow and profit. (Delek had 500 convenience stores as of last
count.) No doubt in 50 or 100 years someone will come up with the next fuel alternative, but he is
convinced that the days of $30-per-barrel oil are over: "We'll run out of crude oil eventually, but
if I knew when I would sit in the Cayman Islands doing nothing." That's an honest answer coming from
a guy who turned Delek Group's initial investment of $40 million into a company with capitalization
of $1.3 billion.
Back to issue home page
|
|
Email to a Friend
Print-Friendly Format