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Shale oil fields have pushed U.S. crude production to record
highs and industry experts argue operations that have capacity
to refine light crude like Andeavor will be better positioned to
take advantage of the boom.
Andeavor also runs refineries in Alaska, California, Minnesota,
New Mexico, North Dakota, Texas, Utah and Washington which
should complement Marathon's largely Mid-West and Gulf
Coast-based operations.
The cash-and-stock deal values Andeavor, formerly known as
Tesoro, at about $152 per share, a premium of about 24 percent
to closing prices on Friday, driving shares 14.5 percent higher
in initial premarket trading on Monday.
Marathon's board also approved an additional $5 billion share
buy back, but its shares were just over 1 percent lower.
Including Andeavor's debt, Marathon is paying $35.6 billion to
hold 66 percent of a combined company which will have the
ability to process about 3.1 million barrels per day along with
a large network of filling stations and oil and natural gas
pipelines.
Marathon Chief Executive Gary Heminger, who oversaw a 20 percent
rise in net profit in the first quarter, will run the combined
company, with a senior role for Andeavor's chief executive,
Gregory Goff.
"Each of our operating segments are strengthened through this
transaction," Heminger said in a statement.
"It geographically diversifies our refining portfolio into
attractive markets......enhances our midstream footprint in the
Permian basin, and creates a nationwide retail and marketing
portfolio," he added.
The deal is expected to close in the second half of this year.
(Reporting by Shubham Kalia in Bengaluru, additional reporting
Gary McWilliams in Houston; Editing by Gopakumar Warrier and
Anil D'Silva)
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