Categories Earnings, Other Industries

Marathon agrees to buy Andeavor for $23.3 billion

The M&A scenario seems to have picked up in the US with the proposed merger between T-Mobile (TMUS) and Sprint (S). Adding to this, Marathon Petroleum Corp (MPC) today said that it has agreed to take over Andeavor (ANDV) for $23.3 billion, a price estimated at a 24% premium over the latter’s share price as of Friday. The combined entity would become the largest US refiner in terms of capacity and market value.

The deal, which anticipates closure in the second half of 2018, is expected to bring annual synergies of about $1 billion within the first three years. Marathon will also be able to increase its natural gas processing capacity by around 20% following the deal. The deal will also help the company in increasing exports to Mexico.

Marathon pump
Image courtesy: Wikimedia Commons

The transaction is less likely to face too many regulatory hurdles, thanks to the diverse geographic presence of both companies. Marathon operates largely in the Midwest while Andeavor’s operations are mostly in the western part of the US.

A growth in fuel demand and the shale boom has given a boost to the US refining industry. The new entity will have a production capacity of over 3 million barrels of crude per day. The merger will also be beneficial in terms of logistics capabilities.

Additionally, the combination is expected to benefit going forward from regulations that aim to curb pollution from ships. The demand for clean fuels will benefit Marathon in terms of expansion in refining operations.

Shares of Marathon saw a drop while Andeavor’s stock saw a rise following the news.

Most Popular

Tyson Foods (TSN) Q1 2023 Earnings: Key financials and quarterly highlights

Tyson Foods Inc. (NYSE: TSN) reported first quarter 2023 earnings results today. Sales rose 2.5% year-over-year to $13.2 billion. Net income attributable to Tyson was $316 million, or $0.88 per

After weak start to 2023, Apple (AAPL) sees some bright spots

Apple Inc. (NASDAQ: AAPL) this week reported its first revenue decline in more than three years, even as the high inflation continues to squeeze customers’ spending power. Sales of the

Earnings: Qualcomm (QCOM) Q1 profit falls on lower revenues

Chipmaker Qualcomm, Inc. (NASDAQ: QCOM) has reported lower earnings and revenues for the first quarter of 2023. The company also provided guidance for the second quarter of 2023. At $9.5

Tags

Add Comment
Loading...
Cancel
Viewing Highlight
Loading...
Highlight
Close
Top