* Accelerates MPC's strategy to grow higher-valued, stable cash flow retail
business
* Positions Speedway as one of the largest company-owned and -operated
convenience store chains in the U.S.
* Creates substantial commercial and operational synergies and marketing
enhancements
* Leverages integrated refining and transportation logistics operations
* Provides outlet for incremental 200,000 barrels per day of refined products
FINDLAY, Ohio, May 22, 2014 - Marathon Petroleum Corporation (NYSE: MPC) today
announced its subsidiary, Speedway LLC, has signed a definitive agreement with
Hess Corporation to acquire Hess Retail Holdings LLC. This transaction
incorporates all of Hess' retail locations, transport operations and shipper
history on various pipelines, including approximately 40,000 barrels per day
(bpd) on Colonial Pipeline. The total consideration is $2.874 billion comprised
of a cash purchase price of $2.37 billion, an estimated $230 million of working
capital and $274 million of capital leases. The acquisition is expected to be
funded with a combination of debt and available cash and is anticipated to close
late in the third quarter of 2014, subject to customary closing conditions and
regulatory approvals.
"This acquisition will be transformative for MPC and Speedway as it will
significantly expand our retail presence from nine to 23 states through these
premier Hess locations throughout the East Coast and Southeast," said MPC
President and Chief Executive Officer Gary R. Heminger. "Our strategy is focused
on growing higher-valued, stable cash flow businesses, and this transaction
fully supports that objective. With this significant geographic expansion, we
will be able to further leverage our integrated refining and transportation
logistics operations, providing an outlet for an incremental 200,000 bpd of
assured sales from our refining system."
Looking forward, Heminger said, "This acquisition represents an important step
in our long-term strategy by accelerating Speedway's planned growth into
contiguous markets and supporting the goal of generating $1 billion of earnings
before interest, taxes, depreciation and amortization. It also underscores our
commitment to balancing value-enhancing investments with continuing capital
returns to shareholders."
Hess is the largest operator of convenience stores along the East Coast and the
fifth largest in the U.S. by number of company-operated sites with 1,256 stores
located in 16 states. Speedway is the nation's fourth-largest convenience store
chain by number of company-owned and -operated sites with approximately 1,480
stores located in nine states. The addition of Hess' stores to the Speedway
network of sites will broaden Speedway's geographic footprint and position
Speedway as the premier convenience store operator in the eastern U.S. The
combined business will have 2013 pro forma revenues of more than $27 billion,
6.2 billion gallons of annual fuel sales, and $4.8 billion of annual merchandise
sales at more than 2,700 retail locations.
Tony Kenney, president of Speedway, commented, "This will be a significant
acquisition for Speedway, as we will become the largest company-owned and
-operated convenience store chain in the nation based upon revenue and the
second largest by store count. We are eager to bring the value of the Speedway
brand as well as our industry-recognized loyalty program, Speedy Rewards, to
millions of new customers. We will apply our merchandise sales focus to deliver
both sales and margin growth and leverage Hess' leadership in fuel sales in
these markets. We also see the potential for tremendous opportunities and
significant synergies through combined best practices and economies of scale
throughout our entire retail network, which we believe will further drive
earnings growth over the next several years."
Conference Call
At 10:00 a.m. EDT today, MPC will hold a webcast and conference call to discuss
this transaction. Interested parties may listen to the conference call on MPC's
website at http://www.marathonpetroleum.com by clicking on the "Conference Call
May 22" link in the upper right corner of the page. Replays of the conference
call will be available on the company's website through June 5, 2014.
Barclays Capital Inc. acted as financial advisor to Marathon Petroleum
Corporation in connection with the transaction.
###
About Marathon Petroleum Corporation
MPC is the nation's fourth-largest refiner, with a crude oil refining capacity
of approximately 1.7 million barrels per calendar day in its seven-refinery
system. Marathon brand gasoline is sold through approximately 5,200
independently owned retail outlets across 18 states. In addition, Speedway LLC,
an MPC subsidiary, owns and operates the nation's fourth-largest convenience
store chain, with approximately 1,480 convenience stores in nine states. MPC
also owns, leases or has ownership interests in approximately 8,300 miles of
pipeline. Through subsidiaries, MPC owns the general partner of MPLX LP, a
midstream master limited partnership. MPC's fully integrated system provides
operational flexibility to move crude oil, feedstocks and petroleum-related
products efficiently through the company's distribution network in the Midwest,
Southeast and Gulf Coast regions. For additional information about the company,
please visit our website at http://www.marathonpetroleum.com.
About Speedway
Speedway LLC (Speedway), headquartered in Enon, Ohio, is the nation's fourth
largest company-owned and -operated convenience store chain with approximately
1,480 stores located in nine states. Speedway is a wholly owned subsidiary of
Marathon Petroleum Corporation (NYSE: MPC). For further information about
Speedway, visit the company's website at www.speedway.com.
Investor Relations Contacts:
Beth Hunter (419) 421-2559
Geri Ewing (419) 421-2071
Media Contacts:
Angelia Graves (419) 421-2703
This press release contains forward-looking statements within the meaning of
federal securities laws regarding MPC. These forward-looking statements relate
to, among other things, expectations, estimates and projections concerning the
business and operations of MPC. You can identify forward-looking statements by
words such as "anticipate," "believe," "estimate," "expect," "forecast,"
"project," "could," "may," "should," "would," "will" or other similar
expressions that convey the uncertainty of future events or outcomes. Such
forward-looking statements are not guarantees of future performance and are
subject to risks, uncertainties and other factors, some of which are beyond the
company's control and are difficult to predict. Factors that could cause MPC's
actual results to differ materially from those in the forward-looking statements
include: the time and costs required to consummate the proposed acquisition of
Hess Retail Holdings LLC; the satisfaction or waiver of conditions in the
purchase agreement governing the proposed acquisition; the ability to obtain
regulatory or other third-party approvals and consents and otherwise consummate
the proposed acquisition; our ability to achieve the strategic and other
objectives relating to the proposed acquisition, including any expected
synergies; our ability to successfully integrate Hess retail operations and
achieve the expected results of the acquisition; volatility in and/or
degradation of market and industry conditions; the availability and pricing of
crude oil and other feedstocks; slower growth in domestic and Canadian crude
supply; completion of pipeline projects within the U.S.; consumer demand for
refined products; transportation logistics; the reliability of processing units
and other equipment; the ability to successfully implement growth opportunities;
impacts from repurchases of shares of MPC common stock under share repurchase
authorizations, including the timing and amounts of any common stock
repurchases; state and federal environmental, economic, health and safety,
energy and other policies and regulations, including the cost of compliance with
the Renewable Fuel Standard; other risk factors inherent to MPC's industry; and
the factors set forth under the heading "Risk Factors" in MPC's Annual Report on
Form 10-K for the year ended December 31, 2013, filed with the Securities and
Exchange Commission. In addition, the forward-looking statements included herein
could be affected by general domestic and international economic and political
conditions. Unpredictable or unknown factors not discussed here or in MPC's Form
10-K could also have material adverse effects on results.
Speedway to Acquire Hess Retail:
http://hugin.info/147922/R/1787836/614100.pdf
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originality of the information contained therein.
Source: Marathon Petroleum Corporation via GlobeNewswire
[HUG#1787836]