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Mergers & Acquisitions

Marathon Petroleum Plans to Spin Off Speedway: Report

Board also said to be discussing leadership changes
Photograph courtesy of Marathon Petroleum Corp.

FINDLAY, Ohio — Marathon Petroleum Corp. is preparing to spin off its retail gas-station and convenience-store network and considering changes to its executive leadership to satisfy activist shareholders, sources familiar with the matter told The Wall Street Journal.

Marathon Petroleum’s board is discussing changes including a retail spinoff and the possibility of replacing Chairman and CEO Gary Heminger and other executives, the sources told the newspaper.

In a response provided to CSP Daily News, a Marathon Petroleum spokesperson said, “The company does not comment on rumors or speculation.”

Activist investors have been pushing for change. In late September, Elliott Management Corp., New York, sent a letter to the Marathon Petroleum board with a plan “to unlock the value currently trapped in Marathon’s conglomerate structure” by splitting it into three independent businesses: refining, midstream and retail.

Elliott Management has a 2.5% stake in Marathon Petroleum. D.E. Shaw Group, another Marathon shareholder, which owns a 0.9% stake, also supports a split.

Shareholders Paul Foster and Jeff Stevens, who together have a 1.7% stake, also sent a letter to Marathon Petroleum’s board calling for Heminger’s replacement over concerns related to the company’s strategy, performance and governance. A second letter said that there is “overwhelming support” among investors to change leadership.

The Marathon Petroleum board previously has expressed support for Heminger.

This is not Elliott Management’s first attempt to force Marathon Petroleum to make changes. In 2017, the board, in part prompted by investors, conducted a “rigorous and independent” strategic review of the company’s retail network, which decided that keeping Speedway as an integrated business within Marathon Petroleum “drives the greatest long-term value for shareholders.”

The Findlay, Ohio-based company will report earnings Oct. 31. Through its subsidiary Speedway LLC, Enon, Ohio, Marathon Petroleum owns and operates approximately 4,000 convenience stores in 30 states under the brands Speedway, SuperAmerica, Arco and others. Speedway is No. 3 in CSP’s2019 Top 202 ranking of U.S. c-store chains by number of company-owned retail locations.

The integrated downstream energy company, which Marathon Oil Corp. spun off in 2011, operates 16 refineries, and its marketing system includes approximately 7,800 branded U.S. locations, including about 5,600 Marathon-branded retail outlets. It also owns the general partner and majority limited partner interest in midstream marketing company MPLX.

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