Marathon Ups Cash Offer for MarkWest 2nd Time – Deal in Trouble?

For a second time in as many weeks, Marathon Petroleum has increased the amount of cash it’s willing to pay as part of the deal to purchase Marcellus/Utica midstream giant MarkWest Energy. Last week Marathon upped the cash portion of the deal from $675 million to $1.075 billion–a hefty $400 million increase (see Marathon Increases Cash Dowry for MarkWest Buyout by 63%). Yesterday Marathon announced they have increased it again–they’re now willing to pay $1.28 billion in cash, in addition to unit swaps and other financial high jinks in a deal worth $15 billion (initially was worth $20 billion). That is, Marathon has just added another $205 million to the dowry they’re offering. Does the increase have anything to do with former MarkWest CEO John Fox telling everyone MarkWest is crazy for selling itself for such a low price (see Former MarkWest Energy CEO Urges Vote Against Marathon Buyout)? MarkWest is attempting to win a PR battle against Fox. In their announcement about receiving more cash as part of the deal, MarkWest claims three big unitholders (i.e. shareholders) representing a collective 15% of the outstanding units (i.e. shares) say they will vote in favor of the deal. That’s still a long way from 51%. We wonder if this deal is in trouble…

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