FINDLAY, Ohio — Marathon Petroleum Corp. intends to spin off its Speedway convenience-store chain, the third-largest in the United States, into an independent, publicly traded company, it announced officially today. The independent Speedway will consist of Marathon Petroleum's company-owned retail store operations, and Marathon Petroleum will retain its direct-dealer business. Also, Gary Heminger, chairman and CEO of Marathon Petroleum, has announced his plan to retire in 2020.
The moves follow a push by activist investors to enhance shareholder value. In late September, Elliott Management Corp., New York, proposed a plan “to unlock the value currently trapped in Marathon’s conglomerate structure” by splitting it into three independent businesses: refining, midstream and retail. Shareholders Paul Foster and Jeff Stevens called for Heminger to be replaced over concerns related to the company’s strategy, performance and governance.
The board has appointed a committee that will consider internal and external candidates to succeed Heminger. A nationwide search is underway. Meanwhile, Gregory Goff, executive vice chairman of Marathon Petroleum and member of the board of midstream company MPLX GP LLC, also has elected to retire, effective Dec. 31.
As part of the Speedway separation process, Marathon Petroleum will initiate a nationwide search for a Speedway CEO from both internal and external sources. Speedway President Tony Kenney announced his retirement in June. Timothy Griffith, senior vice president and chief financial officer, succeeded him on July 1.
“Today's announcement to separate Speedway will create a new independent company that is well-positioned to achieve sustained growth and create substantial shareholder value,” said Heminger. “We have built Speedway into an exceptional business. Over the past eight years, we have grown Speedway nearly fourfold from roughly $400 million of annual EBITDA to approximately $1.5 billion. Speedway has delivered leading same-store merchandise growth, fuel margins and profitability and has significant opportunities for further growth. With a potential enterprise value of $15 billion to $18 billion for stand-alone Speedway, we believe this transaction will unlock significant value for MPC shareholders and form the basis of a compelling value proposition for future Speedway investors.”
The Marathon Petroleum board said it also will form a special committee to look at value-creating options for the company’s midstream business.
“Marathon Petroleum’s plan to separate Speedway and to continue evaluating its midstream business are key elements of the next phase in the company's long track record of taking transformative action to drive shareholder value,” the company said.
“We will execute on the separation of Speedway and evaluate opportunities to unlock the value of midstream, while continuing to optimize the larger combined business and progress the realization of our targeted synergies. Our goal has been, and continues to be, maximizing shareholder value over the long term,” Heminger said.
Although the separation of Speedway will not require a shareholder vote, the separation will be subject to final approval by the Marathon Petroleum board and other customary conditions.
Findlay, Ohio-based Marathon Petroleum is an integrated downstream energy company. It operates 16 refineries, and its marketing system includes approximately 7,800 branded U.S. locations, including about 5,600 Marathon-branded retail outlets. It also owns the general partner and majority limited partner interest in midstream marketing company MPLX. Marathon Petroleum subsidiary Speedway LLC, Enon, Ohio, owns and operates approximately 4,000 convenience stores in 30 states under the brands Speedway, SuperAmerica, Arco and others. Speedway is No. 3 in CSP’s 2019 Top 202 ranking of U.S. c-store chains by number of company-owned retail locations.
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