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HOUSTON -- Marathon Oil Corp. entered into a non-binding letter of intent with an investment group composed of ACON Investments LLC, NTR Partners LLC and TPG Capital LP, for the sale of most of Marathon's Minnesota downstream assets, including 166 company-owned and -operated SuperAmerica convenience stores, SuperAmerica Franchising LLC and SuperMom's Bakery, a baked goods supply operation.
Of the 166 wholly owned stores, 159 are located in Minnesota, one is located in South Dakota and six are located in Wisconsin, Robert Calmus, Marathon spokesman, told CSNews Online.
Also included in the sale are 67 franchisee locations through SuperAmerica Franchising LLC. Of these stores, 61 are located in Minnesota, one is located in South Daokta and five are located in Wisconsin. If this deal were to come to fruition, "this will shift [the franchisor] relationship to the new owner," Calmus said.
As reported in a CSNews Online Breaking News Alert yesterday, also included in the sale is the 74,000 barrel per day St. PaulPark refinery and associated terminal, as well as interests in pipeline assets in Minnesota and associated inventories, the company stated.
The sale is part of Marathon's strategic efforts to align the company's asset portfolio with its business plans, Calmus told CSNews Online.
"As part of this, a sale of our downstream assets in Minnesota as a cohesive chunk can capture the value of these assets, and redeploy the [proceeds] to projects that will provide strong long-term returns that are more in the direction of our business plans," he said. "When you combine the refinery with the pipeline, and bakery factory and retail outlets, as a whole they have a value together. This was why the investment group and we feel it's a fair market value."
If completed, the transaction would not affect Marathon's brand footprint in Minnesota, which are composed of locations owned and operated by independent jobbers and dealers, Calmus said.
In addition, Marathon plans to provide services to support the operation of the downstream facilities during a transition period, should the deal be completed.
"We recognize, as the investors do, that this is a lot, between the refinery and c-store operations and all the other people who make up the population of these assets. And they will continue to operate these assets," Calmus said, noting as of now there is no specified length of time for transitional support.
The estimated overall transaction value is expected to be in excess of $800 million, including inventories at current market values, Marathon stated. The company may also receive additional contingent payments over a number of years as part of the agreement.
Under the initial agreements, the investment group will have a period of exclusivity to work towards negotiation of definitive agreements.
Marathon anticipates closing the deal within the late third or fourth quarter. The sale is subject to conclusion of definitive agreements and Marathon board approval. Marathon's financial advisor for this transaction is Morgan Stanley.
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