As reported in a Morgan Keegan/CSP Daily News Flash yesterday, ACON and TPG have signed definitive agreements with Marathon Oil's wholly owned subsidiary Marathon Petroleum Co. LP (MPC) to acquire the majority of Marathon's Minnesota downstream assets. The total [image-nocss] sale value of the operating assets and associated inventories is approximately $900 million.
ACON and TPG will be acquiring the 74,000-barrel-per-day St. Paul Park refinery and an equity interest in the Minnesota Pipe Line, the pipeline which supplies the majority of the refinery's crude oil. They also will be acquiring a portfolio of retail convenience stores including 166 owned and leased SuperAmerica convenience stores (159 in Minnesota, six in Wisconsin and one in South Dakota), 67 franchised SuperAmerica convenience stores, contracts to supply refined products to an additional 90 c-stores as well as ownership of the SuperMom's bakery and commissary.
Marathon and the investor group first announced that a letter of intent had been signed on May 19, 2010. The transaction is expected to close before the end of the year, subject to customary closing conditions. (Click here for previous CSP Daily News coverage.)
The acquirers will form a new company, Northern Tier Energy LLC to operate the assets. Marathon will provide transition services after closing to support the creation of the new enterprise. Northern Tier Energy will operate the Minnesota assets as a standalone company.
The senior Northern Tier management team has extensive refining industry experience with Mario E. Rodriguez serving as CEO and Hank Kuchta serving as its COO. Following the close of the transaction, Northern Tier Energy will seek to grow through continued investments in the Minnesota assets. In addition, Northern Tier Energy will look to acquire additional refining and marketing assets with similarly attractive characteristics.
This deal is part of Marathon's ongoing efforts to ensure the company's asset portfolio is strategically aligned with its business plans, the company said, while maintaining its position as one of the leading refining, marketing and transportation operations in the nation. It added that it expects to continue to be one of the largest suppliers of finished products in the Midwest and Southeast through its remaining refining, distribution and marketing system.
"Marathon's commitment to being a good corporate citizen has been a key objective for our operations in St. Paul Park and throughout the state of Minnesota. We are grateful to the community of St. Paul Park for the support that they have given us for many years and know that the positive and productive relationships that have been developed over time will continue to help ensure the ongoing success of these operations," said Gary R. Heminger, executive vice president of Marathon Oil and president of MPC. "Through the outstanding efforts of our employees in Minnesota who operate the refinery, terminals and SuperMom's, and the many employees of the SuperAmerica stores in Minnesota and Wisconsin, we were able to achieve our goals over the last several years. They are to be commended for their commitment to the community and their dedication to operating in a safe, environmentally responsible and efficient manner."
"The assets we are acquiring are strategically well positioned to withstand the challenges of the global market and have been well maintained and invested in by Marathon," said Jonathan Ginns, founder and managing partner of ACON Investments. "They have an excellent safety and environmental compliance record and have been consistently profitable, even through the recent recession. We believe that under Mario and Hank's experienced leadership, Northern Tier Energy will transition smoothly to operating as a fully independent company."
Michael MacDougall, partner of TPG Capital, added, "We are very pleased to add this investment to TPG's growing portfolio of upstream and downstream energy investments, We look forward to working with our partners at ACON and the Northern Tier Energy management team to grow the business organically as the economy continues to recover and to use Northern Tier Energy as a platform for additional downstream acquisitions."
Rodriguez said, "We are excited to launch Northern Tier Energy with this investment in an outstanding group of assets under the sponsorship of ACON and TPG. We are looking forward to working with the talented employees across the refinery, terminal, retail and SuperMom's businesses and to operate with the highest commitment to safety, reliability and the environment. Our goal is to grow Northern Tier Energy profitably and to be a responsible corporate citizen in the communities in which we operate."
ACON Investments is a Washington, D.C.-based private-equity firm ACON has been a longtime energy investor, executing investments in upstream and midstream oil and gas as well as in energy infrastructure and energy services, including Mariner Energy, Chroma Oil and Gas, Milagro Oil and Gas, Signal International, Tropigas LLC, and SAE Towers.
San Francisco-based TPG Capital is the global buyout group of TPG, a private investment firm. It has experience with global public and private investments executed through leveraged buyouts, recapitalizations, spinouts, growth investments, joint ventures and restructurings. TPG has experience in the energy sector with investments including Alinta Energy, Belden & Blake, Copano Energy, Denbury Resources, Energy Future Holdings (formerly TXU), Texas Genco, and Valerus Compression Services. It has also been an active investor in the retail sector with investments including American Tire Distributors, Burger King, Debenhams, J.Crew, Myer, Neiman Marcus and PETCO.
Houston-based Marathon is an integrated international energy company engaged in exploration and production; oil sands mining; integrated gas; and refining, marketing and transportation operations. Marathon is the fourth largest United States-based integrated oil company and the nation's fifth largest refiner.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.