Marathon Negotiating Sale of Speedway After Pandemic Stymied Earlier Efforts

After the pandemic brought to a halt its earlier efforts, Marathon Petroleum Corp MPC has been in negotiations for the sale of its Speedway gas-station unit.

What Happened

Alimentation Couche-Tard Inc ANCUF, a Canadian company, is said to be a possible buyer of the gas-station unit, reported the Wall Street Journal. 

There is no clarity on the valuation of Speedway, but last fall it was estimated to be worth between $15 billion and $18 billion by Marathon.

No concrete time-frame for a deal has yet emerged, and Marathon may spin off the gas-station business instead of selling it.

Why It Matters

According to the WSJ, Marathon had planned to separate Speedway from itself due to pressure from activist investors such as Elliott Management Corp.

Talks for the sale of Speedway were held with the parent of 7-11 convenience stores, the Japanese Seven & i Holdings Co. Ltd. SVNDY, but sale efforts had to be halted due to the pandemic. The failed deal would have raked in $22 billion.

Hopeful of a sale, Marathon delayed the spinoff schedule to the first quarter of 2021 instead of the end of this year, reported the WSJ.

Speedway owner, Marathon, owns and runs nearly 4,000 convenience stores in the United States. Couche-Tard operates nearly 10,000 such stores in North America.

Marathon’s market capitalization has eroded by a third in 2020 to near $25 billion, it posted a first-quarter loss of $9.2 billion, the largest quarterly loss ever.

The company is now under the leadership of Michael Hennigan, who took over as CEO from Gary Heminger in mid-March. Heminger resigned following pressure from activists. 

Price Action 

Marathon Petroleum shares traded 5.93% higher at $40.75 in the after-hours session on Thursday. The shares had closed the regular session 3.61% higher at $38.47.

Image: Marathon Petroleum