Marathon Petroleum Corp. has announced that it has agreed to buy American rival Andeavor in a $23.3 billion deal that will create the biggest refiner in the U.S. with plus 3 million bpd capacity.
The definitive merger agreement will see Marathon Petroleum acquire all of Andeavor's outstanding shares, representing a total equity value of $23.3 billion. Marathon Petroleum and Andeavor shareholders will own approximately 66 per cent and 34 per cent of the combined company, respectively.
The transaction was unanimously approved by the board of directors of both companies and is expected to close in the second half of 2018, subject to regulatory and other customary closing conditions, including approvals from both MPC and ANDV shareholders.
"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. 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," said Gary R. Heminger, MPC chairman and chief executive officer.
The headquarters will be located in Findlay, Ohio, and the combined business will maintain an office in San Antonio, Texas. At closing, Greg Goff, Andeavor's chairman and chief executive officer, will join Marathon Petroleum as executive vice chairman.
"As the largest refiner by capacity in the U.S., with a best-in-class operating capability and a strong capital structure, the combined company will be exceptionally well-positioned to deliver on its synergy and earnings targets. We look forward to working together to deliver on the full potential of this powerful combination," added Goff.
Samuel Davis, Wood Mackenzie Research Director, commented: "The deal is expected to position Marathon as the largest US refiner with a combined 3 million barrels per day of refining capacity, with geographic diversification away from its core Midwest and Gulf Coast refining markets. For both companies, the biggest advantage of the deal is the scale and diversification that it brings away from current footprints. Marathon acquires high quality refining assets in the West Coast and Pacific NorthWest, while Andeavor reduces its direct exposure to future downturns in West Coast refining."