By John Kell
May 22, 2014

FORTUNE — Hess Corp. (HES) agreed to sell its retail business to Marathon Petroleum Corp. (MPC) for $2.6 billion, a deal that will combine the fourth- and fifth-largest convenience store chains in the U.S.

The deal will combine Hess — the largest operator of convenience stores along the East Coast and the fifth largest in the U.S. — with Marathon Petroleum’s Speedway. Speedway has about 1,480 stores in nine states, with a bulk of those locations in Ohio, Michigan, Indiana and Kentucky.

Marathon Petroleum said the deal, which it intends to fund with a combination of debt and available cash, would expand its retail presence to 23 states. Marathon Petroleum Chief Executive Gary Heminger said the deal would allow the company to leverage its refining and transportation logistics operations and provide an outlet for sales from the company’s refining system.

MORE: Europe leans more heavily on Russian gas

Speedway generated $14.48 billion in revenue in 2013, almost 15% of Marathon Petroleum’s total revenue for that year. It recently expanded into new markets, including western Pennsylvania and Tennessee, and Marathon Petroleum had previously said it intended to acquire stores through opportunistic acquisitions. Meanwhile, revenue from Hess’ retail marketing and other segment totaled $10.38 billion last year.

Hess, which has 1,342 gas stations and convenience stores along the East Coast, intends to use proceeds from the deal to repurchase more shares. The deal, which is expected to close before the end of the year, will result in Hess fully focusing on exploration and production.

And what about those well known Hess toy trucks? Don’t worry: Hess put out a separate statement on Thursday saying it would continue to sell them online after 2014.

You May Like