Hess Corp., which kicked off the year announcing plans to spin off or sell its convenience store business and focus on oil exploration and gasoline production, this week agreed to sell its retail business to Marathon Petroleum Corp. for $2.6 billion.
Hess is the largest operator of convenience stores along the East Coast and the fifth largest in the U.S. by number of company-operated sites with 1,256 stores located in 16 states.
Hess will use proceeds from the sale for additional share repurchases and the company has increased its existing share repurchase authorization from $4 billion to $6.5 billion.
“The sale of our retail business marks the culmination of our strategic transformation into a pure-play exploration and production company,” said John B. Hess, CEO.
Findlay, Ohio-based Marathon will roll up the stores in its Speedway LLC subsidiary.
The transaction includes all of Hess' retail locations, transport operations and shipper history on various pipelines, including approximately 40,000 barrels per day (bpd) on Colonial Pipeline.
"This acquisition will be transformative for [Marathon] and Speedway as it will significantly expand our retail presence from nine to 23 states through these premier Hess locations throughout the East Coast and Southeast," said Gary R. Heminger, Marathon’s president and CEO. "
Speedway is the nation's fourth-largest convenience store chain by number of company-owned and -operated sites with approximately 1,480 stores located in nine states.
The addition of Hess' stores to the Speedway network of sites will broaden Speedway's geographic footprint and position Speedway as the premier convenience store operator in the eastern U.S. The combined business will have 2013 pro forma revenues of more than $27 billion, 6.2 billion gallons of annual fuel sales, and $4.8 billion of annual merchandise sales at more than 2,700 retail locations.
"This acquisition represents an important step in our long-term strategy by accelerating Speedway's planned growth into contiguous markets and supporting the goal of generating $1 billion of earnings before interest, taxes, depreciation and amortization,” Heminger added.
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