MPLX: Marathon Petroleum to fund cash portion of $20 billion MarkWest Energy acquisition

By Lisa Kerner

Charlotte, N.C., July 13 – MPLX LP and MarkWest Energy Partners, LP announced a definitive merger agreement whereby MarkWest would become a wholly owned subsidiary of MPLX. The unit-for-unit transaction has an enterprise value of $20 billion, including the assumption of $4.2 billion of debt.

MPLX’s sponsor, Marathon Petroleum Corp., will contribute $675 million of cash to MPLX to fund a one-time cash payment to MarkWest unitholders. MarkWest unitholders will receive $3.37 cash per unit in addition to 1.09 common units of MPLX for a total consideration of $78.64 per MarkWest common unit.

MPLX held a conference call on Monday to discuss the transaction details.

Marathon will also contribute an additional $298 million of cash to MPLX to maintain its 2% general partner interest.

No incremental debt will be issued by MPLX or Marathon as a result of the merger, according to the call presentation.

MPLX is targeting leverage of about four times debt-to-adjusted EBITDA and plans to manage in support of an investment-grade credit profile.

The combination would create the fourth-largest master limited partnership based on a market capitalization of $21 billion, according to MPLX.

The transaction is expected to close in the fourth quarter.

MPLX is a Findlay, Ohio, limited partnership formed by Marathon Petroleum Corp. to own, operate, develop and acquire crude oil, refined product and other hydrocarbon-based product pipelines and midstream assets.

MarkWest is a Denver-based company that gathers and transports natural gas, natural gas liquids and crude oil.

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