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VALERO BUYING PREMCOR TO BECOME TOP U.S. OIL REFINER

Valero Energy Corp. agreed to buy Premcor Inc. for $6.9 billion in cash and stock to become the largest U.S. oil refiner as rising demand for diesel fuel and gasoline leads to record profits.

Valero, now the third-biggest refiner, will issue $3.5 billion in stock and pay $3.4 billion in cash, the companies said today in a statement. Premcor investors can receive 0.99 Valero share or $72.76 in cash for each share, 23 percent more than Friday's closing price of $59.

Valero will surpass Exxon Mobil Corp. and ConocoPhillips in the U.S. refining industry, processing about one of every six barrels consumed. Chairman William Greehey built San Antonio- based Valero through more than $7.5 billion of acquisitions in seven years as environmental concerns prevented new refineries from being constructed. This is his biggest takeover yet.