ASHLAND Marathon Petroleum Corp. has entered an agreement to sell Speedway to the company that owns 7-Eleven stores.
The company paid $21 billion for Speedway; the transaction is expected to close in the first quarter of 2021, according to a statement from Marathon. The arrangement also includes a 15-year fuel supply agreement for approximately 7.7 billion gallons per year associated with the Speedway business.
“This transaction marks a milestone on the strategic priorities we outlined earlier this year,” Michael J. Hennigan, president and chief executive officer of Marathon Petroleum Corp., said. “Our announcement crystalizes the significant value of the Speedway business, creates certainty around value realization and delivers on our commitment to unlock the value of our assets. At the same time, the establishment of a long-term strategic relationship with 7-Eleven creates opportunities to improve our commercial performance.”
The deal, announced Monday, is expected to result in after-tax cash proceeds of approximately $16.5 billion. Marathon Petroleum expects to use the proceeds to both repay debt to protect its investment-grade credit profile and return capital to shareholders.
7-Eleven said the agreement will help bring the total number of stores in the world’s biggest economy and Canada to nearly 14,000.
Following the deal, Seven & I shares fell more than 8% to JPY 2937.5 on Monday, the biggest one-day drop since March. Marathon Petroleum shares rose 0.5% to $38.38 in after-hours trading.
Analysts said the deal was a good thing for Marathon.
“We think this is a positive outcome for Marathon Petroleum, with the company receiving a price that’s above expectations (which we peg at ~$17-18 billion pre-tax), crystallizing Speedway value immediately, and bringing in more cash for greater financial flexibility (vs. a spin),” Benny Wong, equity analyst at Morgan Stanley, told finance.yahoo.com.
7-Eleven is a subsidiary of Seven & I Holdings, which is based in Tokyo.
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