Marathon Petroleum Corp. plans to buy competing oil refineries Andeavor for more than $ 20 billion, the Wall Street Journal reported, in a deal that could create the largest fuel producer in the US
The stock and cash offer values Andevor at about $ 150 per share, the Journal said, citing an unidentified source. That's a premium of 23 percent over the closing price on Friday. The purchase is expected to be announced on Monday, the report said. The two companies did not immediately respond to requests sent outside of office hours in the United States.
Marathon Petroleum, headquartered in Findlay, Ohio, is the third largest independent US after-market capitalization refiner with a value of approximately $ 38.6 billion in Bloomberg. Based in San Antonio, Texas, the Andenauer company, formerly known as Tesoro Corp., is the fourth-largest company, worth $ 18.7 billion. Phillips 66 is the largest independent US refiner, worth $ 51.9 billion.
The combined company would also own the Valero Energy Corp. and thus become the largest refinery capacity in the USA. According to Bloomberg calculations, which use data from the Energy Information Administration as of January 1, 2017, this is nearly 16.9 percent of the country's total.
Marathon's geographic footprint focuses on the Midwestern United States Gulf Coast, while Andeavor's refineries and pipelines are located in the western United States. The various sites could facilitate approval, the Journal said.
Marathon Chief Executive Officer Gary Heminger is expected to lead the combined company, with a senior role for his colleague at Andevor, Gregory Goff. The transaction is expected to generate $ 1 billion in synergies, the Journal reported.
U.S. Refineries are among the biggest beneficiaries of the shale boom as they are plentifully supplied with supplies at world prices due to the rapid growth of oil production. Oil & Refinery Standard & Poor's 500 Index hit an all-time high last week.
Independent oil refineries in the US enjoyed more profits from the recent tax code overhaul than their actual fuel manufacturing business at the end of last year. One-time tax profits of $ 4.3 billion received by Marathon Petroleum and Andeavor in the fourth quarter together with Valero matched the net income they reported for full-year 2016, according to Bloomberg data.
– With the support of Laura Blewitt and Javier Blas