Marathon to take on debt to fund $35.6 billion Andeavor acquisition

By Devika Patel

Knoxville, Tenn., April 30 – Marathon Petroleum Corp. will use its revolver and possibly other debt to finance its planned combination with Andeavor.

Under the agreement, Marathon will acquire all of Andeavor's outstanding shares, for a total equity value of $23.3 billion and total enterprise value of $35.6 billion.

Andeavor shareholders will have the option to choose 1.87 Marathon shares or $152.27 in cash.

“There is some incremental debt that we’ll take on to fund the transaction,” Marathon senior vice president and chief financial officer Timothy T. Griffith said on the company’s conference call announcing the combination on Monday.

“We’ll probably hit the revolver out of the gate with it.

“But there is so much cash flow that is generated from this combination, both on the base earnings of the business as well as in the synergy achievement.

“We have absolutely no concerns at all that this business is squarely in investment-grade territory and in fact I think you’re going to see us lobbying for an upgrade over time,” Griffith said.

“We did meet with all three of the rating agencies at the end of last week to brief them, so they should be reporting soon,” Marathon chairman and chief executive officer Gary R. Heminger said on the call.

The transaction is expected to close in the second half of 2018.

Marathon Petroleum is a crude oil refiner based in Findlay, Ohio. Andeavor is a San Antonio-based marketing, logistics and refining company.

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