Following a five months delay induced by the coronavirus pandemic, Marathon Petroleum stated, it has agreed to sell its Speedway gas stations in the United States to Seven & i Holdings, a Japanese retail group, for $21 billion.
In 2019, Marathon had come under pressure from activist investor Elliott Management, and had announced the launch of a sweeping restructuring, including spinning off Speedway, which it said was worth around $18 billion, including debt.
In a statement Marathon said, “After-tax proceeds from the sale, which has been approved by the boards of both companies, are estimated at $16.5 billion,” and went on to add, it will use the proceeds to reduce its debt profile.
For Seven & i, the deal will help the Japanese firm increase its footprint in the U.S. gas stations market and help it shift its focus beyond a saturated Japan market.
In a statement the Japanese company said, the deal will bring its U.S. and Canada store count to around 14,000.
The deal is expected to close during the first quarter of 2021; it includes a 15-year fuel supply contract for around 7.7 billion gallons per year associated with the Speedway business, said Marathon.
In March 2020, the Japanese company had abandoned the deal over worries over the price tag, reportedly around $22 billion, in the wake of a global economic slowdown induced by the Wuhan coronavirus.
7-Eleven expects to achieve $475 million to $575 million of synergies through the third year following the closing of the deal.
The deal is also likely to result in a compound annual growth of over 15% in 7–Eleven’s operating income after the first three years of the closure of the deal, said the company; the purchase price reflects a $3 billion in tax benefits.