Marathon Petroleum Corp (NYSE: MPC) has agreed to sell its Speedway convenience store business to 7-Eleven, Inc, a subsidiary of Japan’s Seven & i Holdings Co., Ltd (OTC: SVNDY) for $21 billion in cash, the two companies announced Sunday.
The fuel maker said it expects to close the deal in the first quarter of 2021 and revealed that the after-tax cash proceeds amount to $16.5 billion. The oil company will use the proceeds to repay debt and safeguard its investment-grade profile as well as return capital to its shareholders.
As a part of the deal, Marathon has signed a 15-year agreement to supply 7.7 billion gallons fuel to Speedway every year.
7-Eleven said it stands to acquire 3,900 Speedway stores in 35 states.
“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,” the convenience stores chains's CEO Joe DePinto said in a statement.
Why It Matters
Marathon was under pressure from activist investors, such as Elliott Management Corp., to sell Speedway, according to the Wall Street Journal.
7-Eleven and the Ohio-based oil firm had also held discussions for the sale of Speedway at an earlier occasion but those talks reportedly fell through due to the COVID-19 pandemic.
Marathon posted a record $9.2 billion Q1 loss and is set to report Q2 earnings on Monday.
Marathon shares closed almost 0.3% higher at $38.20 on Friday and gained another 0.5% in the after-hours.
Seven & i OTC shares closed 3.19% lower at $15.17 the same day.
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