The Year’s Largest Energy Deal
Marathon Petroleum Corp. (MPC) announced that it will sell its Speedway gas stations to Seven & I Holdings (SVNDY), the Tokyo-based parent company of 7-Eleven. The $21 billion all-cash sale is the largest energy-related deal so far this year.
By adding Speedway’s nearly 4,000 stores, 7-Eleven will have 14,000 locations in the US and Canada. In particular, the acquisition will help expand 7-Eleven’s presence in the Midwest and East Coast.
Marathon Sures Up its Finances
Marathon has faced financial hardships recently. Due to lower oil sales, the company announced that it will be shutting down two oil refineries in New Mexico and California. Though gasoline and diesel sales have recovered somewhat, jet fuel sales are still historically low.
Investors like Elliott Management Corporation have been urging Marathon to sell its Speedway locations for some time. After disagreements over price in the spring, Marathon has reached a deal with Seven & I Holdings, which is expected to close at the beginning of 2021, after an antitrust examination. Marathon plans to use the cash to reduce its debt and fund dividend payments.
7-Eleven has reported an increase in convenience-store sales during the COVID-19 pandemic. Analysts speculate that people are looking to spend as little time as possible in grocery stores, and convenience stores offer a quicker way to shop.
7-Eleven is working to expand its fresh food offerings and private brand products at its US locations. With its new stores, the company will have many more opportunities to profit from these initiatives.
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