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FINDLAY, Ohio — Marathon Petroleum Corp. (MPC) dropped down certain terminal, pipeline and storage assets to MPLX for a total consideration of approximately $2 billion.
The assets include 62 light-product terminals with approximately 24 million barrels of storage capacity; 11 pipeline systems consisting of 604 miles of pipeline; and 73 tanks with approximately 7.8 million barrels of storage capacity.
A crude oil truck unloading facility at MPC's refinery in Canton and eight natural gas liquids storage caverns in Woodhaven, Mich., with approximately 1.8 million barrels of capacity, were also part of the transaction.
"This dropdown of additional high-quality logistics assets to MPLX represents the first of several drops expected to occur in 2017, and is an important part of our plan to unlock the value of our midstream business for investors," said Gary R. Heminger, MPC chairman, president and CEO.
"The stable, fee-based earnings from these assets will add scale and diversification to MPLX's portfolio of high-quality midstream assets," he added.
MPC formed MPLX, a diversified, growth-oriented master limited partnership, in 2012 to own, operate, develop and acquire midstream energy infrastructure assets.
MPC is contributing these assets in exchange for the issuance of $504 million in MPLX equity and $1.511 billion in cash. The equity to be issued in the transaction consists of MPLX common units and general partner units to maintain MPC's 2-percent general partner interest in MPLX. The units will be valued based on the 10-day volume weighted average price of MPLX common units prior to the closing, according to MPC.
The total consideration equates to an eight times multiple of the $250 million of EBITDA these businesses are expected to generate in the next 12 months. The transaction is expected to be immediately accretive to MPLX's 2017 distributable cash flow.
The terms of the acquisition were approved by the MPLX board of directors following the approval of the transaction by its independent conflicts committee. The conflicts committee was advised by Jefferies LLC as to financial matters and Akin Gump Strauss Hauer & Feld LLP as to legal matters.
Findlay-based MPC is the nation's third-largest refiner, with a crude oil refining capacity of approximately 1.8 million barrels per calendar day in its seven-refinery system. Marathon brand gasoline is sold through approximately 5,500 independently owned retail outlets across 19 states. In addition, Speedway LLC, an MPC subsidiary, owns and operates the nation's second-largest convenience store chain, with approximately 2,730 convenience stores in 21 states.