M&A

Remember exchanging notes in grade school? “Do you like me? [ ] Yes [ ] No” Exchanging notes in the corporate world is a little more complex than that–but it seems to us like it’s not far removed from exchanging notes in grade school. In the case of high finance and the MarkWest Energy/Marathon Petroleum merger deal, the notes getting exchanged have (big) financial value and implications. MarkWest/Marathon are exchanging old MarkWest IOUs (notes) for new Marathon notes. If it doesn’t get delayed, the exchange will happen on Dec. 18–just in time for Christmas. Will it be a Merry Christmas for existing MarkWest note holders? If you can figure it out, please let us know…
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At a special meeting yesterday, the unitholders (i.e. shareholders) of MarkWest Energy voted to approve the merger/buyout offer from Marathon Petroleum. MarkWest will, by Friday of this week, become a wholly-owned subsidiary of Ohio-based Marathon. The approval comes after both co-founders of the company, John Fox and Brian O’Neill, came out strongly against the deal (see Both MarkWest Co-Founders Strongly Against Sale to Marathon). One of their criticisms is that current MarkWest management gets a “golden parachute” from the deal–they personally make boatloads of money for selling the company. But that didn’t seem to bother investors/unitholders who obviously think MarkWest combined with Marathon is better than MarkWest on its own. Here’s the official MarkWest announcement following the vote…
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There is a fevered battle going on to prevent Marathon Petroleum from consummating a deal to buy MarkWest Energy. Yesterday we told you that MarkWest was touting two more proxy advisory firms, in addition to a previously named advisory firm, have endorsed the deal (see War of Words Continues: 2 More Proxy Cos Endorse MarkWest Sale). We also told you that one of MarkWest’s two co-founders and a former CEO of the company, John Fox, is dead set against the deal (see Former MarkWest Energy CEO Urges Vote Against Marathon Buyout). The other MarkWest co-founder, Brian O’Neill, has now come out against the sale as well…
Read More “Both MarkWest Co-Founders Strongly Against Sale to Marathon”

The public relations battle between the current management and board of MarkWest Energy, who stand to personally benefit from a sale of the company to Marathon Petroleum (via Golden Parachutes), continues. On Friday MarkWest issued another press release (seems they’re coming along almost daily now) to encourage people to vote “yes” with their units. MarkWest is claiming two more proxy advisory firms have endorsed the deal–Glass Lewis and Egan-Jones. It was just last week that MarkWest’s former CEO issued another press release of his own telling the world this is a bad deal for common unitholders and should be voted down (see War of Words: Battle to Sell MarkWest Energy to Marathon Heats Up). MarkWest, in their latest press release, re-issued their plea for anyone with even a couple of units (think “shares of stock) laying in a drawer somewhere to vote–every vote counts in this battle…
Read More “War of Words Continues: 2 More Proxy Cos Endorse MarkWest Sale”

The war of words continues in what increasingly appears to be a losing battle for MarkWest Energy to convince enough shareholders to vote in favor of a proposed sale to Marathon Petroleum. We told you two weeks ago that John Fox, former CEO of MarkWest Energy, came out strongly against the deal (see Former MarkWest Energy CEO Urges Vote Against Marathon Buyout). Since that time Marathon has increased the amount of cash they’re willing to offer–twice–from an original $675 million to now $1.28 billion (see Marathon Ups Cash Offer for MarkWest 2nd Time – Deal in Trouble?). The original deal was worth around $20 billion when you include unit swaps and other considerations. Now the deal is worth around $15 billion due to unit prices plunging over the past few months. Two days ago MarkWest promoted the news that Institutional Shareholder Services (ISS), an “independent” proxy advisory firm, was recommending unitholders vote in favor of the deal. Yesterday John Fox issued his own rebuttal to ISS and continues to say this is “fundamentally a bad deal” and that ISS’ own report supports his arguments against the deal. It’s getting hot in the kitchen!…
Read More “War of Words: Battle to Sell MarkWest Energy to Marathon Heats Up”

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…
Read More “Marathon Ups Cash Offer for MarkWest 2nd Time – Deal in Trouble?”

It was only four months ago that Marathon Petroleum (headquartered in Ohio, fourth largest refiner in the U.S.) announced a deal to buy MarkWest Energy, arguably the premier Marcellus/Utica midstream company (see Midstream Bombshell: MarkWest Sells Itself to Marathon Petroleum). It certainly seemed like the two were on the way to consummating the marriage by the end of this year (see Marathon 3Q15: Closing on MarkWest Merger “Later this Year”). Last week MarkWest told unitholders (think shareholders) it’s time to sign your proxy statements allowing representatives to “vote yes” to the deal (see MarkWest Tells Unitholders Time to Sign Proxy for Marathon Sale). A few days later MarkWest co-founder and former CEO John Fox launched a publicity campaign to announce his strong opposition to the deal (see Former MarkWest Energy CEO Urges Vote Against Marathon Buyout). This week Marathon announced it is increasing its dowry–a one-time cash payment it will make to MarkWest unitholders–from $675 million to $1.075 billion. That $400 million increase pushes the deal value/offer to $15.1 billion. We don’t think it’s a coincidence that last week Fox came out with guns blazing against this deal and this week the dowry went up 63%…
Read More “Marathon Increases Cash Dowry for MarkWest Buyout by 63%”

What’s this? All is not butterflies, unicorns and kisses in the Marathon Petroleum takeover of MarkWest Energy. It was only a little over three months ago that MarkWest announced it was selling itself to Marathon (see Midstream Bombshell: MarkWest Sells Itself to Marathon Petroleum). Since that time both companies have been in a hurry to get the deal done. Last week Marathon told investors the deal will be done by the end of this year (see Marathon 3Q15: Closing on MarkWest Merger “Later this Year”). And just last Friday MarkWest told unitholder (equivalent of stockholders) to hurry up and vote (see MarkWest Tells Unitholders Time to Sign Proxy for Marathon Sale). However, one of the biggest single shareholder in MarkWest, the co-founder of the company and former CEO, John Fox, is telling MarkWest in an open letter that they’re nuts for selling…
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MarkWest Energy, which is selling itself to Marathon Petroleum (a move opposed by it’s co-founder, see today’s related story) issued their third quarter 2015 financial and operational update yesterday. On the financial side the company made quite a bit less money in 3Q15 than it did in 3Q14–$49.2 million vs $86 million–but the fact remains it made money. It didn’t lose money as so many other companies in the Marcellus/Utica region did during 3Q15. That’s a big success in our book! On the operational side, MarkWest started up the Sherwood IV processing plant in Doddridge County, WV during the last three months. There’s more expansion coming to the Sherwood facility later this year. MarkWest also signed a huge deal with Ascent Resources (formerly American Energy, Aubrey McClendon’s company) to build a dry gas gathering pipeline system on 100,000 acres of Utica Shale land in Belmont and Jefferson counties in Ohio. And yes, they also mention the Marathon buyout deal too…
Read More “MarkWest 3Q15: $49M Profit, Expansions Continue, Buyout on Track”

If you hold MarkWest Energy “units” (similar to shares of stock), it’s time to vote on the merger/takeover of MarkWest by Marathon Petroleum. In July, MarkWest (arguably the premier midstream company in the Marcellus/Utica), and Marathon (the fourth largest refiner in the U.S., headquartered in Ohio) announced a $20 billion deal for Marathon to buy out MarkWest (see Midstream Bombshell: MarkWest Sells Itself to Marathon Petroleum). In August, the federal government gave its blessing on the deal (see Federal Govt Approves Marathon Petroleum Buyout of MarkWest). And just last week Marathon said they expect to close on the deal “later this year”–and the end of this year ain’t all that far away (see Marathon 3Q15: Closing on MarkWest Merger “Later this Year”). Last Friday MarkWest released a statement that it’s now time for existing unitholders to sign proxy statements that approve (or not) of the merger. A big meeting will be held on December 1st at MarkWest HQ in Denver for big unitholders, including those representing smaller unitholders via proxy, to cast their vote and plant a big ole rubber stamp of approval on this deal. What? You thought the outcome was ever in doubt? Hate to burst your bubble, but it’s not. This is a done deal folks…
Read More “MarkWest Tells Unitholders Time to Sign Proxy for Marathon Sale”

Below is the third quarter 2015 update from Marathon Petroleum Corporation (MPC). Headquartered in Findlay, OH, MPC is the nation’s fourth-largest refiner, with a crude oil refining capacity of approximately 1.7 million barrels per calendar day in its seven-refinery system. Increasingly the oil that MPC refines comes from the Marcellus/Utica. You may recall that MPC is in the process of buying MarkWest Energy for $20 billion, arguably *the* premier midstream company operating in the Marcellus/Utica region (see Midstream Bombshell: MarkWest Sells Itself to Marathon Petroleum). In their 3Q15 update, MPC says they hope to close on the MarkWest buyout “later this year.” That’s the primary reason to bring you MPC’s update. The secondary reason to bring you the update is because MPC owns the Speedway convenience store chain spanning 22 states. Speedway (at least some of them) used to be called Hess. MPC purchased the Hess gas stations/convenience stores from Hess last year this time for $2.8 billion (see Marathon Petroleum Buys the Hess Truck! What Will We Do for Xmas?). Has your local Hess station been renamed to Speedway yet? Ours have in upstate New York…
Read More “Marathon 3Q15: Closing on MarkWest Merger “Later this Year””