FINDLAY, Ohio, May 8, 2019 /PRNewswire/ -- Marathon Petroleum
Corporation (NYSE: MPC), MPLX LP (NYSE: MPLX), and Andeavor
Logistics LP (NYSE: ANDX) today announced that the two midstream
companies have entered into a definitive merger agreement whereby
MPLX will acquire ANDX in a unit-for-unit transaction at a blended
exchange ratio of 1.07x. This represents an equity value of
approximately $9 billion and an
enterprise value of $14 billion for
the acquired entity. The transaction has been unanimously approved
by MPLX's and ANDX's respective Conflicts Committees and both
Boards of Directors. Subject to the satisfaction of customary
closing conditions and receipt of regulatory approvals, the
transaction is expected to close in the second half of 2019.
Under the terms of the merger agreement, ANDX public unitholders
will receive 1.135x MPLX common units for each ANDX common unit
held, representing a premium of 7.3%, and MPC will receive 1.0328x
MPLX common units for each ANDX common unit held, representing a
2.4% discount. The blended exchange ratio of 1.07x represents a 1%
premium to market1.
"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," said Gary R. Heminger, chairman and chief executive
officer. "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."
Mike Hennigan will remain
President of the combined entity and lead all midstream
activities.
Strategic Rationale
- Enhances prospects for full midstream value-chain
capture: This combination enhances commercial opportunities
building on MPLX's strong footprint in the Marcellus and deepening
the presence in the Permian. MPLX's focus will continue to be
providing services with stable, fee-based cash flows, expanding
export capabilities, and leveraging existing assets for third-party
business.
- Creates opportunities to high-grade and enhance returns on
project backlog: The broader footprint enhances the
ability to combine commercial efforts and selectively deploy
capital towards the highest return projects with strategic
importance.
- Improves financial profile: MPLX is committed
to self-funding the equity portion of its capital investments
and enhancing distribution coverage throughout 2019 and 2020. The
company remains committed to maintaining its investment grade
credit profile and views its increased size, scale, and
diversification of fee-based cash flows as credit enhancing
attributes.
Approvals and Timing
The transaction has been unanimously approved by MPLX's and
ANDX's respective Conflicts Committees and both Boards of
Directors. As part of the transaction, ANDX's General Partner and
an MPC subsidiary, together representing approximately 64% of
ANDX's common units, have entered into a support agreement pursuant
to which those entities have agreed to deliver written consents
approving the transaction. ANDX expects to maintain its current
distribution level through close. The transaction is expected to
close in the second half of 2019, subject to customary closing
conditions.
Investor Presentation, Conference Call, Webcast
MPLX and ANDX will hold a conference call and webcast at
8:30 a.m. EDT today to discuss the
transaction. Interested parties may listen to the conference call
by dialing 1-888-455-2707 (confirmation number 2634753) or by
visiting MPLX's website at http://www.mplx.com and clicking on the
"Events and Presentations" link in the "Investor Center" tab or
ANDX's website at http://www.andeavorlogistics.com and clicking on
the "Events and Presentations" link in the "Investor" tab. A replay
of the webcast will be available on MPLX's and ANDX's websites for
two weeks. An investor presentation will also be available online
prior to the conference call and webcast at http://ir.mplx.com and
http://ir.andeavorlogistics.com.
MPLX and ANDX First-Quarter 2019 Earnings
Announcements
MPLX and ANDX also issued their respective first-quarter 2019
financial results this morning. Management will be available
to answer questions about the earnings releases on today's
conference call. MPLX's and ANDX's previously announced
first-quarter 2019 earnings conference calls and webcasts, which
had been scheduled for Wednesday, May
8, at 11 a.m. EDT and 1 p.m
EDT, respectively, have been canceled.
Advisors
In connection with the transaction, Barclays acted as an
exclusive financial advisor and Jones
Day acted as legal advisor to MPC, Jefferies LLC acted as
financial advisor and Latham & Watkins LLP acted as legal
advisor to the Conflicts Committee of MPLX, and Goldman, Sachs
& Co. LLC acted as exclusive financial advisor and Sidley
Austin LLP acted as legal advisor to the Conflicts Committee of
ANDX.
About Marathon Petroleum Corporation
Marathon Petroleum Corporation (MPC) is a leading, integrated,
downstream energy company headquartered in Findlay, Ohio. The company operates the
nation's largest refining system with more than 3.0 million barrels
per day of crude oil capacity across sixteen refineries. MPC's
marketing system includes branded locations across the United States, including Marathon brand
retail outlets. Speedway LLC, an MPC subsidiary, owns and operates
retail convenience stores across the
United States. MPC also owns the general partner and
majority limited partner interests in two midstream companies, MPLX
LP and Andeavor Logistics LP, which own and operate gathering,
processing, and fractionation assets, as well as crude oil and
light product transportation and logistics infrastructure. More
information is available at www.marathonpetroleum.com.
About MPLX LP
MPLX is a diversified, large-cap master limited partnership that
owns and operates midstream energy infrastructure and logistics
assets, and provides fuels distribution services. MPLX's assets
include a network of crude oil and refined product pipelines; an
inland marine business; light-product terminals; storage caverns;
refinery tanks, docks, loading racks, and associated piping; and
crude and light-product marine terminals. The company also owns
crude oil and natural gas gathering systems and pipelines as well
as natural gas and NGL processing and fractionation facilities in
key U.S. supply basins. More information is available at
www.MPLX.com
About Andeavor Logistics LP
Andeavor Logistics LP is a fee-based, full-service, diversified
midstream logistics company, with integrated assets across the
western and mid-continent regions of the
United States. Andeavor Logistics operates through three
business segments: Terminalling and Transportation, Gathering and
Processing and Wholesale. The Terminalling and Transportation
segment consists of marine terminals, refined product truck
terminals, rail terminals, dedicated storage facilities and
transportation pipelines. The Gathering and Processing segment
consists of crude oil gathering systems and pipelines as well as
natural gas gathering pipelines, processing facilities and
fractionation facilities. The Wholesale segment consists of a
fee-based fuel wholesale business. Andeavor Logistics is a
Delaware limited partnership
headquartered in Findlay,
Ohio.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of federal securities laws regarding MPLX LP (MPLX) and
Andeavor Logistics LP (ANDX). These forward-looking statements
relate to, among other things, the proposed acquisition of ANDX by
MPLX and include expectations, estimates and projections concerning
the business and operations, financial priorities and strategic
plans of the combined entity. In accordance with "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995,
these statements are accompanied by cautionary language identifying
important factors, though not necessarily all such factors, that
could cause future outcomes to differ materially from those set
forth in the forward-looking statements. You can identify
forward-looking statements by words such as "anticipate,"
"believe," "could," "design," "estimate," "expect," "forecast,"
"goal," "guidance," "imply," "intend," "may," "objective,"
"opportunity," "outlook," "plan," "position," "potential,"
"predict," "project," "prospective," "pursue," "seek," "should,"
"strategy," "target," "would," "will" or other similar expressions
that convey the uncertainty of future events or outcomes. Such
forward-looking statements are not guarantees of future performance
and are subject to risks, uncertainties and other factors, some of
which are beyond the companies' control and are difficult to
predict. Factors that could cause MPLX's or ANDX's actual results
to differ materially from those implied in the forward-looking
statements include: the ability to complete the proposed
transaction between MPLX and ANDX on the proposed terms and
timetable; the ability to satisfy various conditions to the closing
of the transaction contemplated by the merger agreement; the
ability to obtain regulatory approvals for the proposed transaction
on the proposed terms and schedule, and any conditions imposed on
the combined entity in connection with the consummation of the
proposed transaction; the risk that anticipated opportunities and
any other synergies from or anticipated benefits of the proposed
transaction may not be fully realized or may take longer to realize
than expected, including whether the proposed transaction will be
accretive within the expected timeframe or at all; disruption from
the proposed transaction making it more difficult to maintain
relationships with customers, employees or suppliers; risks
relating to any unforeseen liabilities of MPLX or ANDX; the amount
and timing of future distributions; negative capital market
conditions, including an increase of the current yield on common
units; the ability to achieve strategic and financial objectives,
including with respect to distribution coverage, future
distribution levels, proposed projects and completed transactions;
adverse changes in laws including with respect to tax and
regulatory matters; the adequacy of capital resources and
liquidity, including, but not limited to, availability of
sufficient cash flow to pay distributions and access to debt on
commercially reasonable terms, and the ability to successfully
execute business plans, growth strategies and self-funding models;
the timing and extent of changes in commodity prices and demand for
crude oil, refined products, feedstocks or other hydrocarbon-based
products; continued/further volatility in and/or degradation of
market and industry conditions; changes to the expected
construction costs and timing of projects and planned investments,
and the ability to obtain regulatory and other approvals with
respect thereto; completion of midstream infrastructure by
competitors; disruptions due to equipment interruption or failure,
including electrical shortages and power grid failures; the
suspension, reduction or termination of Marathon Petroleum
Corporation's (MPC) obligations under MPLX's and ANDX's commercial
agreements; modifications to financial policies, capital budgets,
and earnings and distributions; the ability to manage disruptions
in credit markets or changes to credit ratings; compliance with
federal and state environmental, economic, health and safety,
energy and other policies and regulations and/or enforcement
actions initiated thereunder; adverse results in litigation; other
risk factors inherent to MPLX's and ANDX's industry; risks related
to MPC; and the factors set forth under the heading "Risk Factors"
in MPLX's and ANDX's respective Annual Reports on Form 10-K for the
year ended Dec. 31, 2018, filed with
Securities and Exchange Commission (SEC).
Factors that could cause MPC's actual results to differ
materially from those implied in the forward-looking statements
include: the risk that the cost savings and any other synergies
from the Andeavor transaction may not be fully realized or may take
longer to realize than expected; disruption from the Andeavor
transaction making it more difficult to maintain relationships with
customers, employees or suppliers; risks relating to any unforeseen
liabilities of Andeavor; risks as set forth above related to the
acquisition of ANDX by MPLX; future levels of revenues, refining
and marketing margins, operating costs, retail gasoline and
distillate margins, merchandise margins, income from operations,
net income or earnings per share; the regional, national and
worldwide availability and pricing of refined products, crude oil,
natural gas, NGLs and other feedstocks; consumer demand for refined
products; the ability to manage disruptions in credit markets or
changes to credit ratings; future levels of capital, environmental
or maintenance expenditures, general and administrative and other
expenses; the success or timing of completion of ongoing or
anticipated capital or maintenance projects; the reliability of
processing units and other equipment; business strategies, growth
opportunities and expected investment; share repurchase
authorizations, including the timing and amounts of any common
stock repurchases; the adequacy of capital resources and liquidity,
including but not limited to, availability of sufficient cash flow
to execute business plans and to effect any share repurchases or
dividend increases, including within the expected timeframe; the
effect of restructuring or reorganization of business components;
the potential effects of judicial or other proceedings on the
business, financial condition, results of operations and cash
flows; continued or further volatility in and/or degradation of
general economic, market, industry or business conditions;
compliance with federal and state environmental, economic, health
and safety, energy and other policies and regulations, including
the cost of compliance with the Renewable Fuel Standard, and/or
enforcement actions initiated thereunder; the anticipated effects
of actions of third parties such as competitors, activist investors
or federal, foreign, state or local regulatory authorities or
plaintiffs in litigation; the impact of adverse market conditions
or other similar risks to those identified herein affecting MPLX or
ANDX; and the factors set forth under the heading "Risk Factors" in
MPC's Annual Report on Form 10-K for the year ended Dec. 31, 2018, filed with the SEC.
We have based our forward-looking statements on our current
expectations, estimates and projections about our industry. We
caution that these statements are not guarantees of future
performance and you should not rely unduly on them, as they involve
risks, uncertainties, and assumptions that we cannot predict. In
addition, we have based many of these forward-looking statements on
assumptions about future events that may prove to be inaccurate.
While our respective management considers these assumptions to be
reasonable, they are inherently subject to significant business,
economic, competitive, regulatory and other risks, contingencies
and uncertainties, most of which are difficult to predict and many
of which are beyond our control. Accordingly, our actual results
may differ materially from the future performance that we have
expressed or forecast in our forward-looking statements. We
undertake no obligation to update any forward-looking statements
except to the extent required by applicable law.
Additional Information and Where to Find It
In connection with the proposed transaction, a registration
statement on Form S-4 will be filed with the SEC. INVESTORS AND
SECURITY HOLDERS ARE ENCOURAGED TO READ THE REGISTRATION STATEMENT
AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE
CONSENT STATEMENT/PROSPECTUS THAT WILL BE PART OF THE REGISTRATION
STATEMENT, WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. The final
consent statement/prospectus will be sent to unitholders of ANDX.
Investors and security holders will be able to obtain the documents
free of charge at the SEC's website, www.sec.gov, from ANDX at its
website, http://ir.andeavorlogistics.com, or by contacting ANDX's
Investor Relations at (419) 421-2414, or from MPLX at its website,
http://ir.mplx.com, or by contacting MPLX's Investor Relations at
(419) 421-2414.
Participants in Solicitation
MPLX, ANDX, MPC and their respective directors and executive
officers and other members of management and employees may be
deemed to be participants in the solicitation of consents in
respect of the proposed transaction. Information concerning MPLX's
directors and executive officers is set forth in its Annual Report
on Form 10-K for the year ended Dec. 31,
2018, filed Feb. 28, 2019.
Information concerning ANDX's directors and executive officers is
set forth in its Annual Report on Form 10-K for the year ended
Dec. 31, 2018, filed Feb. 28, 2019. Information concerning MPC's
executive officers is set forth in MPC's Annual Report on Form 10-K
for the year ended Dec. 31, 2018,
filed Feb. 28, 2019. Information
about MPC's directors is set forth in MPC's Definitive Proxy
Statement on Schedule 14A for its 2019 Annual Meeting of
Shareholders, which was filed with the SEC on March 14, 2019. Investors and security holders
will be able to obtain the documents free of charge from the
sources indicated above, and with respect to MPC, from its website,
https://www.marathonpetroleum.com/Investors, or
by contacting MPC's Investor Relations at (419) 421-2414.
Additional information regarding the interests of such participants
in the solicitation of consents in respect of the proposed
transaction will be included in the registration statement and
consent statement/prospectus and other relevant materials to be
filed with the SEC when they become available.
1 Based on May 2, 2019
closing prices
2 Based on projections as of announcement
Investor Relations
Contacts:
|
|
Kristina Kazarian –
Vice President, Investor Relations
|
(419)
421-2071
|
Doug Wendt – Manager,
Investor
Relations
|
(419)
421-2423
|
Evan Barbosa –
Manager, Investor
Relations
|
(419)
421-2539
|
Jim Clarke – Manager,
Investor Relations
|
(419)
421-4165
|
Media
Contacts:
|
|
Chuck Rice –
Director, Communications and Corporate Affairs
|
(419)
421-2521
|
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SOURCE MPLX LP; Andeavor Logistics LP