Marathon Petroleum, Andeavor Reach Merger Agreement

Marathon Petroleum Corp. MPC and Andeavor ANDV announced a merger agreement Monday. 

What Happened

Marathon Petroleum will acquire all outstanding Andeavor shares in a deal worth $23.3 billion, the companies said. The offer represents a 24.4-percent premium to Andeavor's closing price Friday. Andeavor's shareholders can choose between $157.27 per share in cash or 1.87 shares of Marathon Petroleum stock.

Why It's Important

The deal creates an American refining, marketing and midstream company with an initial enterprise value greater than $90 billion.

The merger substantially increases geographic diversification and scale and positions the company for long-term growth, MPC Chairman and CEO Gary Heminger said in a statement. 

The combined company will be the No. 1 U.S. refiner by capacity and a top-five refiner globally, with a capacity of more than 3 million barrels, according to Marathon and Andeavor. 

Marathon said it expects to fully realize more than $1 billion in cost and operating synergies withing the first three years. The oil company projects that the incremental cash generated by the transaction will exceed $5 billion over the first five years.

What's Next

The merger is expected to close in the second half of 2018 and must be approved by shareholders of both companies. It is also subject to approval pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the companies said. 

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Marathon Petroleum's Detroit refinery. Courtesy photo.