OREANDA-NEWS. May 29, 2014. Marathon Petroleum Corporation (NYSE: MPC) today announced its subsidiary, Speedway LLC, has signed a definitive agreement with Hess Corporation to acquire Hess Retail Holdings LLC. This transaction incorporates all of Hess' retail locations, transport operations and shipper history on various pipelines, including approximately 40,000 barrels per day (bpd) on Colonial Pipeline.

The total consideration is USD2.874 billion comprised of a cash purchase price of \\$2.37 billion, an estimated USD 230 million of working capital and USD 274 million of capital leases. The acquisition is expected to be funded with a combination of debt and available cash and is anticipated to close late in the third quarter of 2014, subject to customary closing conditions and regulatory approvals.

"This acquisition will be transformative for MPC and Speedway as it will significantly expand our retail presence from nine to 23 states through these premier Hess locations throughout the East Coast and Southeast," said MPC President and Chief Executive Officer Gary R. Heminger. "Our strategy is focused on growing higher-valued, stable cash flow businesses, and this transaction fully supports that objective. With this significant geographic expansion, we will be able to further leverage our integrated refining and transportation logistics operations, providing an outlet for an incremental 200,000 bpd of assured sales from our refining system."

Looking forward, Heminger said, "This acquisition represents an important step in our long-term strategy by accelerating Speedway's planned growth into contiguous markets and supporting the goal of generating USD 1 billion of earnings before interest, taxes, depreciation and amortization. It also underscores our commitment to balancing value-enhancing investments with continuing capital returns to shareholders."

Hess is the largest operator of convenience stores along the East Coast and the fifth largest in the U.S. by number of company-operated sites with 1,256 stores located in 16 states. Speedway is the nation's fourth-largest convenience store chain by number of company-owned and -operated sites with approximately 1,480 stores located in nine states. The addition of Hess' stores to the Speedway network of sites will broaden Speedway's geographic footprint and position Speedway as the premier convenience store operator in the eastern U.S. The combined business will have 2013 pro forma revenues of more than USD 27 billion, 6.2 billion gallons of annual fuel sales, and USD 4.8 billion of annual merchandise sales at more than 2,700 retail locations.

Tony Kenney, president of Speedway, commented, "This will be a significant acquisition for Speedway, as we will become the largest company-owned and -operated convenience store chain in the nation based upon revenue and the second largest by store count. We are eager to bring the value of the Speedway brand as well as our industry-recognized loyalty program, Speedy Rewards, to millions of new customers. We will apply our merchandise sales focus to deliver both sales and margin growth and leverage Hess' leadership in fuel sales in these markets. We also see the potential for tremendous opportunities and significant synergies through combined best practices and economies of scale throughout our entire retail network, which we believe will further drive earnings growth over the next several years."