Marathon Petroleum Corp agreed to buy rival Andeavor for more than US$23 billion in the largest-ever tie-up between U.S. refiners, giving the combined company a nationwide presence and increased access to growing export markets. The cash-and-stock deal marries operations that are broadly complementary in terms of geography as well as giving Marathon extra capacity in the U.S. light crude produced by a booming shale oil sector. Spurred by record domestic oil production surpassing 10 million bpd, U.S. exports of finished petroleum products have more than doubled in the past decade to 3.6 million bpd. “This transaction combines two strong, complementary companies to create a leading U.S. refining, marketing, and midstream company, building a platform that is well positioned for long-term growth and shareholder value creation,” Marathon Chairman and Chief Executive Officer Gary Heminger said in a statement on Monday. Marathon Petroleum Corp said on Monday it would buy rival Andeavor for more than US$23 billion, forming a company that will leapfrog Valero Energy Corp as the largest independent U.S. refiner by capacity. The deal values Andeavor, formerly known as Tesoro, at about US$152 per share, a premium of about 24 per cent to closing prices on Friday, driving shares in the San Antonio-based firm 14 per cent higher in premarket trading on Monday. Marathon shareholders were less upbeat, knocking 5 per cent off the company’s stock price despite the board approving an additional US$5 billion share buyback. San Antonio, Texas-based Andeavor, formerly known as Tesoro, operates 10 refineries in the western United States with a refining capacity of about 1.2 million barrels per day, and ownership in a logistics business, according to Andeavor website. "There's no question the new company has greater resource capability going forward into Mexico," Andeavor Chief Executive Gregory Goff said on a conference call with analysts. The deal, which is expected to close in the second half of this year, could spur other North American refiners to look harder at acquisitions, said IHSMarkit refining and marketing director Rob Smith.
Marathon Oil purchases Andeavor for $23.3 billion, creating the biggest oil refining firm in the United States.