Under the terms of the merger deal, ANDV shareholders will have the option to choose 1.87 shares of Marathon stock or $152.27 in cash. This will be subject to a proration mechanism which would result in 15% of ANDV’s fully diluted shares receiving cash consideration.
MPC chairman and CEO Gary Heminger said: “This transaction combines two strong, complementary companies to create a leading US refining, marketing, and midstream company, building a platform that is well-positioned for long-term growth and shareholder value creation.”
Marathon expects the deal to generate approximately $1bn of tangible annual run-rate synergies within the first three years in addition to enhancing long-term cash flow generation profile.
Upon completion of the deal, MPC shareholders will own about 66% stake in the combined company while ANDV shareholders will own the remaining 34% interest.
The combined company, which will have throughput capacity of over 3 million barrels per day, is expected to be the largest refiner by capacity in the US, Marathon said.
Andeavor’s refineries in California, the Mid-Continent and the Pacific Northwest are expected to complement MPC’s existing Gulf Coast and Midwest refining footprint.
Besides, the combined company’s expanded presence in the Permian and Bakken regions is expected to boost MPC’s midstream growth opportunities.
Heminger said: “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.”
The transaction is planned to be completed in the second half of 2018. It is subject to regulatory and other customary closing conditions, including approvals from both MPC and ANDV shareholders.
Earlier this year, Marathon divested certain terminal, pipeline and storage assets to MPLX for a total consideration of $2.015bn.
