Marathon Petroleum Corp. increases cash consideration for MPLX/MarkWest merger
OREANDA-NEWS. November 12, 2015. Marathon Petroleum Corporation (NYSE: MPC) today announced that it has agreed to contribute an additional \\$400 million of cash to MPLX LP (NYSE: MPLX), the midstream master limited partnership (MLP) sponsored by MPC, for a total cash contribution of \\$1.075 billion to fund a one-time cash payment to MarkWest unitholders in connection with the pending merger by which MarkWest Energy Partners, L.P. (NYSE: MWE) (MarkWest) would become a wholly owned subsidiary of MPLX. Under the revised terms of the merger agreement, MarkWest common unitholders will receive 1.09 MPLX common units plus a one-time cash payment of approximately \\$5.21 per MarkWest common unit, for a total consideration of approximately \\$52.93 per MarkWest common unit, based on fully diluted units currently outstanding and the closing price of MPLX's common units on Nov. 10, 2015. The additional cash is being contributed to MPLX by MPC under which no new equity units will be issued to MPC, which is on the same basis as the original \\$675 million cash portion. MPC will also contribute approximately \\$225 million, based on the price of MPLX's common units on Nov. 10, 2015, to maintain its 2 percent general partner interest in MPLX. These proceeds will be retained by the partnership to support its growth. All other terms of the merger agreement announced on July 13, 2015, remain the same.
The merger is recommended by the boards of directors of MPC, MPLX, and MarkWest, and the executive management of both partnerships also strongly support the transaction and its revised terms.
"The enhancement to the terms of the agreement reflects the commitment of MPC and MPLX to the combination with MarkWest and conviction that the transaction will create significant benefits for the unitholders, customers and employees of both partnerships," said Gary R. Heminger, MPC president and chief executive officer. "This increase substantially enhances the transaction value for MarkWest unitholders, who will not only benefit from significant distribution growth, but also a substantially lower equity yield, investment-grade debt funding costs, enhanced access to capital and liquidity and a strong general partner prepared to provide support and financial flexibility."
"MPC's continuing support of the partnership reflects the substantial and growing value MPLX represents to the total enterprise and we are eager to continue the growth trajectory of MPLX with the combined partnership," said Heminger.
The transaction is subject to approval by MarkWest unitholders and to customary closing conditions, and is expected to close in the fourth quarter of 2015. The special meeting of MarkWest common unitholders of record as of Oct. 5, 2015, to approve the transaction and related matters is scheduled for Dec. 1, 2015.
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About Marathon Petroleum Corporation
MPC is the nation's fourth-largest refiner, with a crude oil refining capacity of approximately 1.7 million barrels per calendar day in its seven-refinery system. Marathon brand gasoline is sold through approximately 5,600 independently owned retail outlets across 19 states. In addition, Speedway LLC, an MPC subsidiary, owns and operates the nation's second-largest convenience store chain, with approximately 2,760 convenience stores in 22 states. MPC also owns, leases or has ownership interests in approximately 8,300 miles of pipeline. Through subsidiaries, MPC owns the general partner of MPLX LP, a midstream master limited partnership. MPC's fully integrated system provides operational flexibility to move crude oil, feedstocks and petroleum-related products efficiently through the company's distribution network in the Midwest, Southeast and Gulf Coast regions. For additional information about the company, please visit our website at http://www.marathonpetroleum.com.
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