Not a sprint

30 April 2018 By Lauren Silva Laughlin Follow @TheRealLSL

The Midwestern oil group is paying a 24 pct premium for rival Andeavor. Becoming the largest U.S. refiner has merits. But its target’s stock was already up more than 50 pct in a year. Adding value means nailing cost cuts despite only limited geographical overlap.

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Marathon Petroleum has agreed to buy oil refiner Andeavor for more than $23 billion in cash and stock, the two companies said on April 30. Andeavor shareholders will receive either 1.87 shares of Marathon stock or $152.27 a share in cash, with no more than 15 percent of the total deal consideration in cash.

The transaction is at a 24 percent premium to Andeavor’s closing stock price on April 27 based on Marathon’s closing price the same day, the companies said.

The enterprise value of the deal, including Andeavor’s debt, is nearly $36 billion. The companies expect at least $1 billion of annual cost and operating synergies within three years.

Marathon shareholders will own about 66 percent of the combined company while Andeavor’s will own 34 percent.

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