FINDLAY, Ohio — The strategic combination of Marathon Petroleum Corp. (MPC) and Andeavor “was an excellent move,” MPC Executive Vice Chairman Greg Goff said in a video commemorating the one-year anniversary of the $23.3 billion merger of the two refiner-marketers.
The occasion comes as the company faces calls from activist investors to split Marathon Petroleum into three independent businesses. In late September, New York-based Elliott Management Corp. sent a letter to the MPC board with a plan “to unlock the value currently trapped in Marathon’s conglomerate structure” by separating it into refining (Marathon Petroleum), midstream (MPLX) and retail (Speedway) companies.
- Speedway is No. 3 in CSP’s 2019 Top 202 ranking of c-store chains by number of company-owned retail outlets.
“After one year of integrating the business, we have made great progress,” Goff said in the video. “We are focused on delivering on the compelling opportunities this company has. When we work together, we can achieve so much, and right now, we are positioning the company for a very bright future, including tremendous value creation.”
In the video, Chairman and CEO Gary Heminger acknowledges, “Our share price does not fully reflect the underlying value of our assets. [Elliott Management’s] proposal comes as the company’s management team and board of directors continue to progress [with] our own strategic review.”
In 2017, the board said after a “rigorous and independent” strategic review of the company’s retail network that keeping Speedway as an integrated business within MPC “drives the greatest long-term value for shareholders.”
Heminger also said in the video, “We’ve significantly grown our profitability, while at the same time returning over $20 billion to shareholders through dividends and share repurchases since 2011, including $2.1 billion just in the first half of this year alone. ...
"We have done an excellent job capturing synergies that we identified in our strategic combination with Andeavor," he continued. "We are confident we can achieve our target of $600 million of gross annual run rate synergies by the end of this year.”
Heminger is under fire from activist investors who want him to step down over concerns related to MPC’s strategy, performance and governance. Shareholders Paul Foster and Jeff Stevens also sent a letter to MPC’s board calling for the immediate replacement of the company’s chairman and CEO. Foster was chairman of Andeavor predecessor Western Refining, and Stevens was CEO of Western Refining.
“As a member of the board and executive management, I am fully supportive of Gary as CEO,” Goff said in the video.
His statement follows that of James Rohr, MPC’s lead independent director, who said in a response to Foster and Stevens’ letter that “the board of directors is firmly and unanimously supportive of Gary Heminger as MPC’s chairman and CEO and his track record of delivering value to shareholders and all of the company’s constituencies.”
Findlay, Ohio-based Marathon Petroleum, an integrated downstream energy company, operates 16 refineries, and its marketing system includes approximately 7,800 branded U.S. locations, including about 5,600 Marathon brand retail outlets. Its subsidiary Speedway LLC, based in Enon, Ohio, owns and operates more than 4,000 U.S. convenience stores. MPC also owns the general partner and majority limited partner interest in midstream marketing company MPLX.
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