Plans to spin-off Speedway into an independent, publicly traded company


Corporate headquarters of Marathon Petroleum. Photo: courtesy of Marathon Petroleum Corporation.

Marathon Petroleum Corporation (NYSE: MPC) today announced its intention to separate Speedway into an independent, publicly traded company. Independent Speedway will consist of MPC’s company-owned retail store operations with an expected 2019 EBITDA of approximately $1.5 billion. MPC will retain its direct-dealer business, with an expected 2019 EBITDA of approximately $0.4 billion, which is also included in the Retail segment as currently reported. As part of the Speedway separation process, MPC will also initiate a nationwide search for a Speedway CEO from both internal and external sources.

“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 MPC Chairman and Chief Executive Officer Gary R. Heminger. “We have built Speedway into an exceptional business. Over the past eight years we have grown Speedway nearly four-fold 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 standalone 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.” Independent Director John P. Surma will lead a committee of the Board to oversee the separation and CEO search processes.

Additionally, today MPC announced its intent to form a special committee of the Board to enhance its evaluation of potential value-creating options for the Midstream business. Among other aspects, the special Board committee will analyze the strategic fit of assets with MPC, the ability to realize full valuation credit for midstream earnings and cash flow, balance sheet impacts including liquidity and credit ratings, transaction tax impacts, separation costs, and overall complexity. Independent Director J. Mike Stice will lead the special committee charged with this enhanced evaluation of midstream alternatives.

MPC’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. Since becoming a public company, MPC has returned nearly $21 billion in capital and has delivered approximately 323% of total shareholder returns, nearly double the S&P 500 returns during that period. “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 concluded.

Transaction Details

There can be no assurance regarding the ultimate timing of the separation of Speedway or that the proposed spin-off will be completed.  Any transaction of this type is dependent on numerous factors that include the macroeconomic environment, credit markets and equity markets.  Although the separation of Speedway will not require a shareholder vote, the separation will be subject to final approval by the MPC board and other customary conditions.

Source: Company Press Release