Marathon Reorganizes Ahead of Speedway Decision
By Greg Lindenberg on Jun. 01, 2017FINLAY, Ohio -- As its previously announced deadline nears for possibly spinning off its Speedway retail convenience-store subsidiary, Marathon Petroleum Corp. has positioned the top executive of its master limited partnership, MPLX, as its new president.
Here are the details on the leadership changes, as well as a new share repurchase initiative …
Titles at the top
Effective July 1, Donald Templin, president of the general partner of MPLX LP—the master limited partner (MLP) formed in 2012 to own, operate, develop and acquire midstream energy infrastructure assets for Marathon—will become president of Marathon Petroleum Corp.
Chairman, President and CEO Gary Heminger will retain the titles of chairman and CEO of Marathon Petroleum Corp.
"Don has been an extraordinary asset to MPC and its shareholders since we became an independent, publicly traded company," said Heminger. "Whether as CFO, running MPC's operating organizations or heading MPLX, Don's strategic vision and business acumen have been integral to our success. We look forward to his continued leadership as president of MPC."
Templin joined MPC in June 2011 as senior vice president and CFO before being named executive vice president of supply, transportation and marketing in March 2015. He was named to his current position with MPLX in January 2016.
MLP leadership change
Effective June 20, Mike Hennigan, who has been president and CEO of Sunoco Logistics Partners, Dallas, since 2012, will replace Templin as president of MPLX GP LLC.
"We are delighted to welcome Mike to MPLX in his new role as president," Heminger said. "Mike brings a tremendous depth of experience, having led one of the most successful growth-oriented master limited partnerships. Mike has demonstrated outstanding commercial skills as he set the direction, vision and strategy while serving as chief executive."
During his 35 years of industry experience, Hennigan has held a variety of operations and leadership roles with increasing responsibility within Sunoco Logistics, including executive roles as president and CEO and vice president of business development. At Sunoco Inc., Hennigan also held the executive role of senior vice president of supply, trading, sales and transportation.
Hennigan will serve as a member of the board of directors of the general partner of MPLX. He will report to Heminger, who is also chairman and CEO of MPLX GP.
Share repurchase
Meanwhile, on May 31, the MPC board authorized a $3 billion share repurchase in addition to its previous authorization, which had approximately $2.14 billion remaining as of March 31.
"As we execute our strategic initiatives, including dropdowns of midstream assets to our sponsored master limited partnership, we expect cash proceeds from the dropdowns and limited partner distributions to fund substantial ongoing return of capital to shareholders," said Heminger.
MPC said it may use various methods to carry out the repurchases, which could include open market repurchases, negotiated block transactions, accelerated share repurchases or open market solicitations for shares. The timing of repurchases will depend upon several factors, including market and business conditions, and repurchases may be discontinued at any time. The incremental $3 billion repurchase authorization, as well as the remaining portion of the previous authorization, have no expiration date.
Summer deadline
These initiatives come ahead of the conclusion of a review of Speedway LLC by a special committee formed by MPC’s board in January. With the assistance of an independent financial adviser, the review will ensure that Speedway is delivering optimum value to shareholders, the board said. The “full and thorough” review, which is ongoing, will include the possibility of "a tax-free separation of Speedway to MPC shareholders and other strategic and financial alternatives,” MPC said.
The company said it expects the committee to complete the review by summer 2017.
Shareholder Elliott Management Corp., which controls about 4% of MPC stock, has been pushing MPC to spin off the retail network. In a November 2016 letter to Heminger and the MPC board, Elliott Management portfolio manager Quentin Koffey argued that MPC is “severely undervalued” and should consider dropping drop down all MLP-qualifying assets to MPLX and consider spinning off Speedway, or separate Marathon into three separate, stand-alone businesses: retail, refining and midstream operations.
- Speedway is ranked No. 3 inCSP's Top 202 convenience-store chains for 2017 and No. 17 onCSP's Fuels 50 ranking for 2017.
Findlay, Ohio-based MPC is the nation's third-largest refiner. It supplies Marathon-branded gasoline to approximately 5,500 independently owned gas stations and convenience stores in 19 states. Enon, Ohio-based Speedway LLC owns and operates the nation's second-largest c-store chain, with approximately 2,730 locations in 21 states.