7-11 owner to buy Speedway from Marathon for $21B

Marathon Petroleum Corp. has agreed to sell its Enon-based Speedway unit to the corporate parent of the 7-11 convenience store chain for $21 billion, creating questions about the fate of Speedway’s recently expanded Dayton-area headquarters.

In 2018, Marathon announced plans to expand and update Speedway’s headquarters building at a cost of about $48 million, a project that was to feature a new 140,000-square-foot structure connecting two existing buildings on the headquarters campus.

Findlay-based Marathon announced that it and certain of its subsidiaries have entered into a “definitive agreement” with 7-Eleven, Inc., a wholly owned, indirect subsidiary of Tokyo-based Seven & i Holdings Co., Marathon said Sunday.

In the agreement, 7-Eleven will acquire Speedway for $21 billion in cash, Marathon said. The transaction is expected to close in the first quarter of 2021, subject to the usual conditions and regulatory approvals.

“This transaction marks a milestone on the strategic priorities we outlined earlier this year,” Michael Hennigan, president and chief executive of Marathon, said in a release Sunday. “Our announcement crystalizes the significant value of the Speedway business, creates certainty around value realization and delivers on our commitment to unlock the value of our assets.”

A leadership shakeup at Marathon last October positioned gas station chain Speedway LLC for what was thought at the time would be corporate independence as a publicly traded company. Since then, the company has tried to spin off Speedway.

In a conference call with analysts Monday, Hennigan said the sale will result in after-tax proceeds of about $16.5 billion to the company.

It’s also expected to mean a source of long-term business for Marathon.

“The sale also creates a long-term relationship with 7-Eleven that enhances commercial performance potential through attractive supply agreements and future growth opportunities,” the CEO said in the call.

Marathon is hoping for long-term agreements with 7-Eleven to supply nearly 8 billion gallons of fuel a year.

7-Eleven will buy Speedway for $21 billion.

Posted by Thomas Gnau DDN on Sunday, August 2, 2020

The sale also offers Marathon some breathing room financially.

The sale will add 3,900 stores to 9,800 locations operated by 7-Eleven Inc., the company said.

However, Seven & i will raise about $1 billion by selling off overlapping U.S. stores after the sale is complete, Seven & i Chief Executive Officer Ryuichi Isaka said on a conference call Monday.

“This acquisition is the largest in our company’s history and will allow us to continue to grow and diversify our presence in the U.S., particularly in the Midwest and East Coast,” Joe DePinto, president and CEO of 7-Eleven, said in his own statement. “By adding these quality locations to our portfolio, 7-Eleven will have the opportunity to bring convenience to more customers than ever before.”

Wall Street focused on the sale to 7-Eleven over the weekend, rather than the huge losses the company posted Monday, with a lack of demand for fuel leading to refinery shutdowns, the Associated Press reported.

The deal comes just two days after Marathon announced the idling of refineries in New Mexico and California, the AP noted.

The companies did not say how many Speedway stations were included in the agreement. Marathon lists more than 10,000 U.S. locations under Marathon, Speedway and Arco signs.

Shares in Marathon Petroleum Corp. are essentially flat Monday, the AP reported.

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