Well here's the news everyone has been talking about for along time that finally came true! Hess
agreed on May 22 to sell its retail business to Marathon Petroleum’s
Speedway for $2.6 billion. Hess has long wanted to get away from the retail part of the business and focus more on drilling.
According to Hess, its retail part of the company is the largest chain of
company-operated gas stations and convenience stores along the East
Coast.
Marathon said its 1,480 Speedway convenience stores, most of them in
the Midwest, are part of the nation’s fourth-largest chain, just ahead
of Hess. Marathon also sells its gasoline through 5,200 independent
retail outlets.
The deal includes all Hess retail locations, as well as the company’s
transport operations and shipper history on various pipelines.
Marathon said the combined business will become the largest U.S.
chain of convenience stores by revenue. It will include about 2,700
locations and had 2013 pro forma revenue of more than $27 billion.
Marathon will buy Hess Retail Holdings for $2.37 billion in cash, in
addition to $230 million of working capital. The transaction also
includes $274 million in capital leases, bringing its total value to
roughly $2.87 billion.
“This acquisition will be transformative for MPC and Speedway as it
will significantly expand our retail presence from nine to 23 states
through these premier Hess locations throughout the East Coast and
Southeast,” Marathon president and CEO Gary Heminger said in a
statement.
The Findlay, Ohio-based refiner plans to rebrand the Hess locations.
During a conference call with analysts, Speedway president Tony Kenney
said Marathon has a license agreement to use the Hess brand for three
years until the gas stations and convenience stores can be converted to
Speedway.
“It’s basically by agreement that we have to rebrand,” Kenney explained.
“We saw a lot of value in the Hess brand. But as you can appreciate,
Hess is an ongoing, publicly traded company, and the colors and marquee
are their brand,” Heminger said in response to an analyst’s question.
Hess has shed more than $10 billion worth of assets as part of an
effort to transform itself into a pure-play exploration and production
company. With the sale of its convenience stores and gas stations, Hess
has largely completed that objective.
CEO John Hess said the deal with Marathon “marks the culmination of
our strategic transformation into a pure-play exploration and production
company.”
Proceeds from the sale will be used to support an increase in Hess’
share buyback program to $6.5 billion from $4 billion. Since August
2013, Hess has repurchased about $2.8 billion in stock.
Hess also said it will continue to sell its toy trucks, a longtime holiday tradition. Hess plans to sell a 50
th
anniversary edition this year at the retail outlets and online.
Starting next year, the toy trucks will be sold exclusively online.