Marathon to Divest Minn. Refinery in $900M Deal
October 6, 2010
Marathon Oil Corp. on Wednesday announced that its wholly owned subsidiary Marathon Petroleum Company LP (MPC) has entered into definitive agreements with ACON Investments, LLC and TPG Capital, L.P. for the sale of most of Marathon's Minnesota downstream assets. ACON and TPG formed Northern Tier Energy LLC to operate the assets as a stand-alone company.
Marathon, ACON and TPG first announced that a Letter of Intent had been signed on May 19, 2010. Marathon anticipates closing to occur by year-end, contingent upon the buyers meeting the conditions of their financing arrangements and other customary closing conditions. Included in the transaction will be the 74,000 barrel per day St. Paul Park refinery and associated terminals, 166 SuperAmerica convenience stores (including six stores in Wisconsin), SuperMom's LLC, SuperAmerica Franchising LLC, interests in pipeline assets in Minnesota and associated inventories. The total sales value is approximately $900 million including Northern Tier preferred stock with a stated value of $80 million. Approximately $300 million of the total sales value is for the inventories associated with these operations. The agreement also contains earnout and margin support components where Marathon could receive up to an additional $125 million over eight years or may be required to provide up to $60 million of margin support to the buyers, subject to certain conditions. Any margin support paid may be recovered by an increase in the total earnout amount.
This proposed sale is part of Marathon's ongoing efforts to ensure the Company's asset portfolio is strategically aligned with its business plans, while maintaining its position as one of the leading refining, marketing and transportation operations in the nation. MPC expects to continue to be one of the largest suppliers of finished products in the Midwest and Southeast through its remaining refining, distribution and marketing system.
"Marathon's commitment to being a good corporate citizen has been a key objective for our operations in St. Paul Park and throughout the state of Minnesota. We are grateful to the community of St. Paul Park for the support that they have given us for many years and know that the positive and productive relationships that have been developed over time will continue to help ensure the ongoing success of these operations," said Gary R. Heminger, executive vice president of Marathon Oil Corporation and president of MPC. "Through the outstanding efforts of our employees in Minnesota who operate the refinery, terminals and SuperMom's, and the many employees of the SuperAmerica stores in Minnesota and Wisconsin, we were able to achieve our goals over the last several years. They are to be commended for their commitment to the community and their dedication to operating in a safe, environmentally responsible and efficient manner."
Marathon is an integrated international energy company engaged in exploration and production; oil sands mining; integrated gas; and refining, marketing and transportation operations. Marathon, which is based in Houston, has principal operations in the United States, Angola, Canada, Equatorial Guinea, Indonesia, Libya, Norway, Poland and the United Kingdom. Marathon is the fourth largest United States-based integrated oil company and the nation's fifth largest refiner.
ACON Investments is a Washington, D.C. based private equity firm with offices in Los Angeles, Houston, Madrid, Sao Paulo, and Mexico City. Founded in 1996, ACON manages private equity funds and special purpose investment partnerships with investments in the United States, Europe and Latin America. ACON has been a longtime energy investor, with experience in upstream and mid-stream oil and gas as well as investments in power infrastructure and energy services, including Mariner Energy, Chroma Oil and Gas, Milagro Oil and Gas, Signal International, Tropigas Inc, and SAE Towers.
TPG Capital is the global buyout group of TPG, a leading private investment firm founded in 1992, with more than $47 billion of assets under management and offices in San Francisco, Beijing, Fort Worth, Hong Kong, London, Luxembourg, Melbourne, Moscow, Mumbai, New York, Paris, Shanghai, Singapore and Tokyo. TPG Capital has extensive experience with global public and private investments executed through leveraged buyouts, recapitalizations, spinouts, growth investments, joint ventures and restructurings. TPG has significant experience in the energy sector with investments including Alinta Energy, Belden & Blake, Copano Energy, Denbury Resources, Energy Future Holdings (formerly TXU), Texas Genco, and Valerus Compression Services. TPG has also been an active investor in the retail sector with investments including American Tire Distributors, Burger King, Debenhams, J.Crew, Myer, Neiman Marcus and PETCO.
Source: Marathon Oil Corp.
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