Speedway Sale Closing Is ‘Down to Weeks’

FINDLAY, Ohio — Marathon Petroleum Corp.’s long-awaited deal to sell its Speedway retail network is set to close within weeks, according to the refiner and marketer’s president and CEO. Once completed, the $21 billion deal with 7-Eleven Inc. will be among the biggest in the history of the convenience-store industry.

“What we believe at this point is that we’re in weeks, not months. It’s not going to be tomorrow [or] the next day, but we think we are down to weeks,” Michael Hennigan, chief executive of Marathon Petroleum, said on the company’s first-quarter 2021 earnings call concerning the closing of the sale of Speedway to 7-Eleven.

“What we’ve tried to do in this process is to be an intermarried communication tool, because it’s really between the FTC and 7-Eleven. Obviously, we’re at the table trying to understand if we can help the process at all. But … the best way to describe it is the FTC communicated to us that we’re in the final stage of the process. So with that in mind, we think we’re within weeks,” he said. “We don’t think we’re months. We don’t think we’re days. But we think we’re very, very close.”

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Speedway’s sale to 7-Eleven has a long history.

In 2016, activist investors prompted Marathon Petroleum to conduct a strategic review of Speedway, after which the company decided against a sale or spinoff of the retail network. By late 2019, however, continuing investor pressure and changes in the marketplace prompted Marathon Petroleum to decide to spin off the retail unit into an independent, publicly traded company.

In January 2020, Marathon Petroleum also began exploring a sale of Speedway rather than a spinoff, attracting major buyers including Blackburn, U,K,-based EG Group and Seven & i Holdings Co. Ltd., the Tokyo-based parent of 7-Eleven Inc., Irving, Texas. In March 2020, Seven & i dropped a bid to acquire Speedway for approximately $22 billion, citing the high price and the COVID-19 pandemic.

Marathon Petroleum also took a pandemic pause, but returned to the negotiating table in June 2002. 7-Eleven came back, and in August 2020 announced that it would acquire Marathon Petroleum’s more than 3,900-store, 36-state Speedway retail network. Its $21 billion winning bid snatched Speedway away from top contender Alimentation Couche-Tard Inc., Laval, Quebec, Other bidders included EG Group and Murphy USA, El Dorado, Ark., as well as London-based private equity firm TDR Capital.

Originally slated to close by yearend 2020, the deal with 7-Eleven faced further Federal Trade Commission (FTC) review, and the date that the companies expected the transaction to close shifted to second-quarter 2021.

Meanwhile, in April 2021, 7-Eleven announced the sale of 106 c-stores to CrossAmerica Partners, Allentown, Pa., for $263 million as part of the divestiture process to acquire Speedway.

Marathon Petroleum reported a net loss of $242 million for first-quarter 2021, compared with a net loss of $9.2 billion for first-quarter 2020.

"During the first quarter, our industry continued to struggle with reduction in global economic activity and demand for transportation fuels that resulted from the mobility restrictions related to the COVID-19 pandemic,” Hennigan said on the call. “As we started the second quarter, with the rollout of vaccination, we still see industry-wide gasoline demand down around 5% from historical levels.”

For Speedway, now reported under discontinued operations, income from operations was $330 million in first-quarter 2021, compared with $400 million for first-quarter 2020. Speedway's adjusted EBITDA was $332 million in first-quarter 2021, versus $499 million for first-quarter 2020. The results reflect lower fuel margins and volumes, partially offset by higher merchandise sales.

Speedway fuel margin was 25.67 cents per gallon (CPG) in first-quarter 2021, versus 35.40 CPG in first-quarter 2020. Same-store merchandise sales increased by 7% year-over-year and Speedway same-store gasoline sales volume decreased by 12.3% year-over-year, reflecting the effects of the pandemic, the company said.

Discontinued operations for first-quarter 2021 included $23 million in costs related to the separation of Speedway, compared with the first quarter of 2020, which included a $35 million inventory charge and $27 million in costs related to the Speedway separation.

Findlay, Ohio-based Marathon Petroleum is an integrated, downstream energy company. Its Speedway subsidiary, based in Enon, Ohio, is the third-largest c-store chain in the United States, according to CSP’s 2021 Top 40 Update to the 2020 Top 202 ranking of U.S. c-store chains by store count.

Irving, Texas-based 7-Eleven operates, franchises or licenses more than 71,100 7-Eleven c-stores in 17 countries, including more than 9,300 in the United States. It is No. 1 in CSP’s Top 202 ranking.