When we first recommended Alon USA Energy (NYSE: ALJ) three months ago (“Cooking With Cheap Crude”), we called it “one of the cheapest refiners out there, befitting its lack of scale and diversification,” adding that the lagging stock could catch up to its rallying sector.

After a 28% return over the next 90 days, consider that speculation amply rewarded.

Helping things along was the April agreement by Alon Israel Oil to sell its 48% stake in Alon USA to another small U.S. refiner with Israeli roots, Delek Holdings (NYSE: DK). Delek paid $565 million in cash, debt and equity, for an 8% premium over the prior day’s ALJ close.

A side deal bars Delek from increasing its interest in Alon USA to 50% or more without the approval of the company’s six independent board members for a year following the sale’s close on May 14. But Delek already controls five other board seats, its CEO has been named chairman of Alon USA’s board and it’s highly likely that sometime in 2016 Delek will gain control of Alon’s operations.

That would give the combined company three very profitable refineries in Texas and Arkansas, distributing a lot of their output to a network of some 700 filling stations and convenience stores supplied by either Delek or Alon in the Southeast and Southwest.

Alon’s logistics assets might then get merged into the Delek Logistics (NYSE: DKL) MLP supporting Delek’s refining operations.

This looks like an opportunistic grab by fast-growing Delek: according to an Israeli news report, Alon Israel “badly needed cash” to prop up its ailing Israeli supermarket chain.

It’s also good news for investors in Alon USA, who will swap a distracted controlling shareholder for a highly focused one that’s just paid a modest premium to get in and happens to run a larger refining and distribution business on adjacent turf.

Source: Alon USA Partners annual report

Alon USA Partners owns Alon’s flagship Big Spring refinery in in the Permian Basin of West Texas. Alon USA, in turn, owns 82% of Alon USA Partners’ common units.

With all its eggs in a single basket, the MLP has been all over the map with its variable distributions, paying as little as 13 cents per unit for the second quarter of last year following downtime associated with a major turnaround at Big Spring.

It’s performed better lately by taking more of an advantage of discounted Permian crude and selling into stronger fuel and asphalt markets. Including that turnaround-marred quarter last spring the partnership has still distributed $2.56 per unit over the last year, for a trailing yield of 13% at the current price. The 71 cents per unit it paid out in May should be replicated in August at the least given improving margin trends in the second quarter.

Another turnaround project is on the horizon, and could at some point once again sacrifice current income in the name of longer-term profitability. It’s also uncertain whether Alon USA will repeat its attempt to sell its smaller Louisiana refinery to Alon USA Partners; an attempt to do so last fall was sabotaged by skittish credit markets.

The outcome of Delek’s involvement with Alon is also no sure thing, but it’s reasonable to hope for a full combination into a larger and stronger company. Alon USA Partners is not likely to command a strategic premium in any such deal. But it could possibly become a repository for Delek’s own refineries if the latter were to fully adopt the MLP model.

 In the meantime, the glut of Permian crude should prop up refining margins at Big Spring, and therefore ALDW’s distributions.

We’re adding ALDW to the Aggressive Portfolio. Buy below $21. ALJ remains a Buy on dips below $16.