Seven & i Holdings Co., the owner of 7-Eleven, has agreed to buy Marathon Petroleum Corp.’s Speedway gas station for US$21 billion [AU$29 billion].
Fuel maker Marathon Petroleum announced that it has agreed to sell its various gas stations to the owners of the 7-Eleven convenience store chain. This makes it the biggest U.S. energy deal of the year, according to Market Watch.
This is the corner store giant’s move that hopes to expand the gas station’s U.S. footprint despite the uncertainties of the coronavirus pandemic.
A deal partly financed with debt
The agreement with 7-Eleven came less than a year after Marathon had agreed to spin off the convenience store arm of Speedway. This was due to pressure from activist investors, including Elliot Management Corp.
Yahoo! reported that the transaction, apart from being paid in cash but also partly financed using debt, will add about 3,900 Marathon Petroleum’s Speedway stores. These will be in 9,800 locations operated by the retailer’s U.S. 7-Eleven unit, the Tokyo-based company said in a statement last Monday.
Second purchase in the U.S.
The deal securing Marathon Petroleum was the second largest purchase of a U.S. target this year overall, and the biggest yet for Seven & i Holdings.
The company is a giant in the retail sector that boasts 69,000 stores around the world. These include 7-Eleven outlets and Ito-Yokado supermarkets in Japan.
This isn’t their first foray into gas stations outside of the U.S. The Japanese company had previously bought out Sunoco LP’s gas stations for a $3 billion price tag.
Investors have been pushing for changes
The Detroit News further said that in the latter part of the year 2019, Marathon Petroleum faced months of pressure from its investors to make sweeping changes to improve performance. These investors included Elliot Management Corp., and D.E. Shaw & Co.
Elliot Management had wanted Marathon to break itself up into three separate businesses—refining, retail, and pipelines.
Investor pressure also prompted Gary Heminger, CEO of Marathon Petroleum, to step down in March after 45 years of service to the company.
Ryuichi Isaka CEO of Seven & i said in a call that they would be raising about $1 billion by selling off their overlapping U.S. stores after the transaction.
“Marathon Petroleum took a $12.4 billion charge in the first three months of this year while also suspending share buybacks and slashing spending by 30%,” Fortune reports.