Marathon Petroleum Corp. Agree to Rival Oil Refineries Buy Andeavor for $ 23.3 Billion, in a deal that could create the largest independent fuel producer in the US
The supply, payable in cash or shares, estimates Andeavor at around 152, The companies said $ 27 per share on Monday. That's a premium of 24 percent over the closing price on Friday. The Wall Street Journal reported for the first time on the acquisition on Sunday.
"This transaction combines two strong, complementary companies to create a leading US refining, marketing and midstream company and build a long-term, well-positioned growth platform and shareholder value creation, "said marathon chairman and chief executive officer Gary Heminger on Monday.
Marathon's geographic footprint focuses on the US Midwest and the Gulf Coast, while Andeavor's refineries and pipelines are located in the western states. They are among the biggest beneficiaries of the shale boom, as the rapid growth of oil production has given them access to abundant supplies at a discount to world market prices. Independent operators also benefited from the recent revision of US tax legislation, and the Standard & Poor's 500 Index of oil refineries reached a new high last week.
The CEO expects annual cost and operating synergies of approximately $ 1 billion over the first three years. Marathon's Board also approved $ 5 billion in share repurchases given the projected cash flow generation.
The boards of both companies unanimously approved the deal, which should be completed in the second half of this year, subject to the approval of regulators and shareholders.
Marathon Petroleum, based in Findlay, Ohio, is the third-largest US-funded market capitalization refiner, according to Bloomberg, valued at approximately $ 38.6 billion . 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.
Heminger's counterpart in Andewor, Gregory Goff, becomes executive vice chairman.
The combined company would also overtake Valero Energy Corp. to become the largest in refining capacity in the US. According to Bloomberg calculations with data from the Energy Information Administration from 1 January 2017, these are at nearly 2.93 million barrels a day, about 16 percent of the total of the country.