Marathon, Andeavor merge to form integrated energy company

By Patrick C. Miller | May 01, 2018

In a deal worth $23.3 billion, Marathon Petroleum Corp. (MPC) and Andeavor announced this week that they have entered into a merger agreement under which MPC will acquire Andeavor’s outstanding shares to form a major U.S. refining, marketing and midstream company.

Under the agreement, MPC and Andeavor shareholders will respectively own about 66 percent and 34 percent of the combined company. The transaction was unanimously approved by the board of directors of each company and is expected to close in the second half of 2018. The company’s headquarters will be in Findlay, Ohio, and the combined business will maintain an office in San Antonio, Texas.

MPC is second-largest refiner in the U.S, with a crude oil refining capacity of approximately 1.9 million barrels per day in its six-refinery system. MPC said its footprint in the Marcellus—combined with its expanded presence in the Permian and Bakken regions—significantly increases the company’s midstream growth opportunities.

"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 CEO. "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.”

Once the agreement closes, Greg Goff, Andeavor chairman and CEO, will join MPC as executive vice chairman. He will be involved in the strategy for the combined company. Goff, along with three other Andeavor directors, will join the Marathon board of directors.

"With significantly increased scale, a strong platform for our midstream businesses and a leading nationwide retail and marketing distribution portfolio, the combined company presents tremendous value enhancement and growth opportunities for all shareholders," Goff said. "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.”

Andeavor is an integrated marketing, logistics and refining company with a retail-marketing system that includes more than 3,200 stores under multiple fuel brands such as ARCO, SUPERAMERICA, Shell, Exxon, Mobil, Tesoro, USA Gasoline and Giant. Andeavor operates 10 refineries with a combined capacity of approximately 1.2 million barrels per day in the mid-continent and western U.S. and has ownership in Andeavor Logistics LP.