Marathon to acquire Andeavor for $23.3bn

US-based Marathon Petroleum (MPC) has signed an agreement to acquire the outstanding shares of integrated marketing, logistics and refining firm Andeavor (ANDV) in a deal valued at $23.3bn.

With a total enterprise value of $35.6bn, the deal will see Marathon offer ANDV shareholders either 1.87 shares of stock or $152.27 in cash.

Following the completion of the transaction, MPC shareholders will hold around 66% of the combined company, while the remaining interest will be owned by ANDV shareholders.

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.

“Each of our operating segments is 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.

“Importantly, we expect this transaction will be meaningfully accretive for shareholders, generating approximately $1bn of tangible annual run-rate synergies within the first three years and significantly enhancing our long-term cash flow generation profile.”

The combined entity will be headquartered in Findlay, Ohio. Its asset portfolio will comprise Andeavor’s refineries in California, the Mid-Continent and the Pacific Northwest, as well as MPC’s existing Gulf Coast and Midwest refining footprint.

According to MPC, the combined company will have a throughput capacity of more than three million barrels a day.

Over the first five years, MPC expects the transaction to generate incremental cash of more than $5bn.