MarkWest will become a subsidiary of MPLX, an MLP formed by Marathon in 2002 to own and operate pipelines and other hydrocarbon transportation and storage assets.
The merger creates $21bn in market capitalization.
Approved by the boards of the two companies, the deal values MarkWest at around $20bn, including $4.2bn in debt.
MPLX chairman and CEO Gary Heminger said that as part of the combination, MPLX affirms its anticipated distribution growth of 29% this year and expects a 25% compound annual distribution growth rate for the combined entity through 2017.
MarkWest is an MLP with natural gas assets in the Marcellus Shale, Utica Shale, Huron/Berea Shale, Haynesville Shale, Woodford Shale and Granite Wash formation in the US.
The companies said in a statement: "The complementary aspects of MarkWest’s, MPLX’s and Marathon’s highly diverse asset base provide significant additional opportunities across multiple segments of the hydrocarbon value chain.
"The combined entity would further MarkWest’s leading midstream presence in the Marcellus and Utica shales by allowing it to pursue additional dynamic midstream projects."
Under the terms of the agreement, the shareholders of MarkWest would receive a total consideration of $78.64 per share.
Marathon will provide $675m in cash to fund the transaction, which is expected to be closed in the fourth quarter.
Image: MarkWest’s Marcellus segment in Houston. Photo: courtesy of MarkWest Energy Partners, L.P.
