"As we look ahead, we are truly excited about the opportunity the separation presents to each company to unlock value and drive total shareholder return," the chief executive said. "We believe this transaction has significant benefits for both MPC and future Speedway shareholders, and has the potential to create an enterprise value of approximately $15 billion to $18 billion."
One of the key drivers behind the spinoff decision, according to Heminger, was the recent growth in Speedway's scale and earnings power.
"The number of stores has nearly tripled since 2011 to roughly 4,000 and the membership within our Speedy Rewards loyalty program has nearly doubled," he noted.
Speedway has been a consistent top-tier performer in the c-store industry. Historically:
- Speedway has had industry-leading same-store merchandise growth and fuel margins;
- It's led the industry in profitability on a per-store basis; and
- It's built a platform to deliver a strong earnings growth trajectory and exceptional pre-cash flow conversion, which will support continued investment as a standalone company.
As part of the separation process, MPC will establish a long-term, market-based supply agreement with Speedway, which will remain headquartered in Enon, Ohio.
In addition to the Speedway spinoff, MPC has created a special committee to review midstream alternatives, Heminger reported, adding that "unlocking value within the midstream is more complex than the separation of Speedway."
Among the potential midstream alternatives are asset and business divestitures. MPC hopes to complete the review process by its first-quarter 2020 earnings call.
MPC also announced several leadership moves, including Heminger's decision to retire after the first quarter of 2020. He has served as president and CEO of MPC since the company's spinoff from Marathon Oil in June 2011, and as chairman and CEO since 2016. He has also served as chairman and CEO of MPLX GP LLC since 2012.
The board appointed a committee to consider internal and external candidates to succeed Heminger. A nationwide search is underway.
In addition, Greg Goff, executive vice chairman of MPC and a member of the boards of MPC and MPLX's general partner, will retire effective Dec. 31 of this year. Goff joined MPC after its strategic combination with Andeavor in October 2018.
Michael J. Hennigan, current president of MPLX GP LLC, has been appointed CEO of the same organization, effective Nov. 1. Frank M. Semple will succeed Goff as a member of the MPC board.
Findlay-based MPC operates the nation's largest refining system with more than 3 million barrels per day of crude oil capacity across 16 refineries. MPC's marketing system includes branded locations across the United States, including Marathon brand retail outlets. Speedway LLC, a MPC subsidiary, owns and operates retail convenience stores across the U.S. MPC also owns the general partner and majority limited partner interest in MPLX LP, a midstream company that owns and operates gathering, processing, and fractionation assets, as well as crude oil and light product transportation and logistics infrastructure.