By Kirsten Korosec
April 30, 2018

Marathon Petroleum has announced it will buy competitor Andeavor in a $23.3 billion deal that will create the largest independent oil refiner by capacity in the U.S., surpassing the established leader Valero Energy.

Marathon, or MPC, announced Monday that it had agreed to buy all of Andeavor’s outstanding shares that represent a total equity value of $23.3 billion and total enterprise value of $35.6 billion. The transaction was unanimously approved by the board of directors of both companies and is expected to close in the second half of 2018, if it’s approved by regulators and shareholders.

The offer values Andeavor at about $152.27 a share, about 24% over the company’s Friday closing price.

After Marathon buys Andeavor, the company headquarters will be located in Findlay, Ohio, and the combined business will maintain an office in San Antonio, Texas, the companies said Monday.

The deal is notable because of the variety of assets that will eventually come under one company. Marathon’s operations are well established in the Gulf Coast and Midwest, while Andeavor has largely focused on building out refineries and pipelines in the California, mid-continent, and the Pacific Northwest.

The company forms after Marathon buys Andeavor will have a diverse portfolio and massive geographic footprint in the U.S. that should let it operate more efficiently. It also makes it the No. 1 U.S. refiner by capacity with a fuel production throughput of more than 3 million barrels per day. This newly combined company would become a top-five refiner in the world, based on capacity.

MPC Chairman and CEO Gary R. Heminger said Monday in a statement that he expects Marathon buying Andeavor to generate about $1 billion in annual cost and operating synergies within the first three years, which should, in turn, improve its long-term cash flow. The board has authorized an incremental $5 billion in share buybacks based on cash flow it expects to generate with the combined business.

SPONSORED FINANCIAL CONTENT

You May Like

EDIT POST