Marathon Petroleum (MPC) announced that its two master limited partnerships (MLP) MPLX LP and Andeavor Logistics (ANDX) will be merged in a transaction with an estimated equity value of $9bn.
The merger is expected to create a large-scale, diversified midstream company which is supported by fee-based cash flows with an expanded geographic footprint.
As per the merger deal, MPLX has agreed to acquire ANDX in a unit-for-unit transaction at a blended exchange ratio of 1.07x.
The deal, which represents enterprise value of $14bn for the acquired entity, allows ANDX public unitholders to receive 1.135x MPLX common units for each ANDX common unit held.
Additionally, Marathon Petroleum will receive 1.0328x MPLX common units for each ANDX common unit held.
Marathon Petroleum chairman and CEO Gary Heminger said: “This transaction simplifies our MLPs into a single listed entity and creates a leading, large-scale, diversified midstream company anchored by fee-based cash flows.
“This transaction is projected to be immediately accretive to MPLX unitholders on distributable cash flow, demonstrating MPC’s commitment to positioning its midstream business for long-term success.
“The combined entity will have an expanded geographic footprint which we believe enhances our long-term growth opportunities and the sustainable cash flow profile of the business. We are confident about the midstream growth and value-creation opportunities that exist across this combined platform in the best basins in the U.S.”
Marathon Petroleum expects the combined company to enhance prospects for full midstream value-chain capture; create opportunities to high-grade and enhance returns on project backlog; and improve financial profile.
Heminger added: “This merger creates a leading, large-scale, diversified midstream company anchored by fee-based cash flows.”
Subject to customary closing conditions, the transaction is scheduled to be completed in the second half of 2019.
Large-cap master limited partnership, MPLX owns and operates midstream energy infrastructure and logistics assets, and provides fuels distribution services.
Andeavor Logistics, a fee-based, full-service, diversified midstream logistics company, operates through three business segments which include terminalling and transportation, gathering and processing and wholesale.
Earlier this year, Marathon Petroleum closed previously announced $23.3bn deal to acquire Andeavor.