Marathon Petroleum to buy rival US petroleum refining company Andeavor for $23.3bn

Marathon Acquisition of Andeavor : US petroleum refining company Marathon Petroleum has agreed to acquire rival oil refining company Andeavor (formerly known as Tesoro) for $23.3 billion.

Marathon Acquisition of Andeavor

Marathon acquisition of Andeavor is expected to create a top US integrated energy company with an initial enterprise value of over $90 billion, and with headquarters in Findlay, Ohio.

As per the merger agreement signed by the two US petroleum refining companies, Andeavor shareholders can either opt to receive 1.87 shares of Marathon Petroleum or $152.27 in cash, in exchange of each share they hold in Andeavor.

Marathon acquisition of Andeavor will diversify the portfolio of the enlarged petroleum refining company into attractive markets and also improve access to advantaged feedstocks. These include Andeavor’s California refineries, Mid-Continent refineries and the Pacific Northwest refineries to go along with Marathon Petroleum’s Gulf Coast refineries and Midwest refineries.

Marathon Petroleum’s Detroit Refinery. Photo courtesy of Marathon Petroleum Corporation.

Marathon Andeavor Merger

As far as midstream operations are concerned, the Marathon Andeavor merger will boost the enlarged company’s growth platform and will especially improve presence in the attractive Permian basin.

Gary R. Heminger – chairman and CEO of Marathon Petroleum, commenting on Marathon acquisition of Andeavor, said: “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.”

Energy Acquisition News

Following the completion of the Marathon Andeavor merger, original shareholders of Marathon Petroleum will hold nearly 66% of stake in the enlarged company while the remaining 34% or so will be owned by Andeavor shareholders.

Commenting on Marathon acquisition of Andeavor, Greg Goff – chairman and CEO Of Andeavor, said: “This strategic combination provides our shareholders with a premium for their shares and the opportunity to benefit from substantial future value creation at MPC. 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.”

Marathon acquisition of Andeavor has been approved unanimously by the boards of the two US petroleum refining companies.

Based on receipt of regulatory approvals and shareholder approvals on either side, the Marathon acquisition of Andeavor is likely to be wrapped up in the second half of this year.