FINDLAY, Ohio --Marathon Petroleum Corp. (MPC) Chairman, CEO and President Gary Heminger confirmed during an investor presentation that a special committee of Marathon’s board and its independent adviser expect to complete the much-anticipated review of its Speedway retail network this summer.
At the J.P. Morgan 2017 Energy Equity Investor Conference in New York on June 26, Heminger presented a slide indicating that the “completion of [the] Speedway evaluation” would occur in third-quarter 2017.
The review, prompted by investor concerns, will ensure that Speedway is delivering optimum value to shareholders, the board said. The “full and thorough” review will include the possibility of "a tax-free separation of Speedway to MPC shareholders and other strategic and financial alternatives,” MPC has said.
Here's a look at where Speedway stands as the decision nears ...
Findlay, Ohio-based MPC is the nation’s third-largest refiner. It sells Marathon-brand gasoline through approximately 5,500 independently owned retail outlets across 19 states.
Speedway LLC, with headquarters in Enon, Ohio, is the largest company-owned and -operated convenience-store chain east of the Mississippi River. The chain has more than 2,730 locations in 21 states.
It sold 6 billion gallons of transportation fuels and $5 billion in merchandise in 2016.
Speedway’s vision is to be “the customer’s first choice for value and convenience.” The company has a loyalty program, Speedy Rewards, averaging more than 5.7 million active members.
MPC said it expects to invest $380 million in the company for 2017. It plans to build new stores and remodel and rebuild existing retail locations in its core markets.
Shareholder Elliott Management Corp., which controls about 4% of MPC stock, has been pushing MPC to spin off the retail network. In a November 2016 letter to Heminger and the MPC board, Elliott Management portfolio manager Quentin Koffey argued that MPC is “severely undervalued.”
He said the company should consider dropping down all MLP-qualifying assets to MPLX—the master limited partner (MLP) Marathon formed in 2012 to own, operate, develop and acquire midstream energy-infrastructure assets—and consider spinning off Speedway. He also said the company should consider separating Marathon into three separate, stand-alone businesses: retail, refining and midstream operations.
Heminger has said he disagrees with the letter’s conclusions and has pushed back against the idea of a Speedway spinoff.
“We have delivered substantial value through our integrated and diversified model, including our Speedway retail business,” he told CSP Daily News last November.
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