Marathon to buy Andeavor for $23 billion

Published on: 30 Apr, 2018

Marathon Petroleum Corp. (NYSE: MPC) announced on Monday that has entered into a definitive merger agreement to acquire Andeavor (NYSE: ANDV) for $23.3 billion, allowing the two to become top U.S. refiners and expanding its market.

Andeavor shares rose by 13 percent Monday morning shortly after the opening bell.

"This transaction combines two strong, complementary companies to create a leading U.S. refining, marketing, and midstream company, building a platform that is well-positioned for long-term growth and shareholder value creation," said Gary Heminger, MPC chairman and chief executive officer.

"Each of our operating segments are strengthened through this transaction, as it geographically diversifies our refining portfolio into attractive markets, increases access to advantaged feedstocks, enhances our midstream footprint in the Permian basin, and creates a nationwide retail and marketing portfolio that will substantially improve efficiencies and enhance our ability to serve customers.”

Andeavor holds refineries mainly on the West Coast, while Marathon holds refineries in the Midwest region. The combined company will be able to expand its markets on a nationwide scale, strengthening its customer base.

The merged company will allow it to surpass Valero Energy Corporation (NYSE:VLO) to become the largest U.S. refiner, with the capacity to process over 3 million barrels per day.

Andeavor purchased a 25 percent stake last week in Phillips 66 Partners LP’s Gray Oak pipeline, which will begin to haul Permian oil to the Gulf Coast beginning next year.

Under the agreement, Andeavor shareholders will the option to choose between 1.87 shares of Marathon stock or $152.27 in cas, representing a premium of 24.4 percent to Andeavor’s closing price on April 27, 2018. Marathon and Andeavor shareholders will own approximately 66 percent 34 percent of the combined company, respectively.

The combined company will open a second office in San Antonio, Texas, while the main headquarter is still Marathon’s in Ohio. Heminger will lead the combined company. The transaction is expected to close in the second half of 2018.

Marathon shares were trading 7 percent lower on Monday after missing estimates for its first quarter earnings. The company reported revenue of $18.98 billion, missing estimates by $1.07 billion and an EPS of $0.08, missing estimates by $0.07.


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Danny Abramov



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