Marathon Petroleum resisting calls to split

Edd Pritchard - Akron Beacon Journal (TNS)

Marathon Petroleum executives used an anniversary to assure employees the company intends to continue as a diversified oil and gasoline company.

A New York hedge fund, Elliott Management, recently recommended that Marathon break into three different companies, then called for Gary Heminger, chief executive officer, to step down.

Last week, Heminger and Greg Goff, one of Marathon’s directors, used the one-year anniversary of Marathon’s acquisition of Andeavor to tell employees that management is “positioning the company for a very bright future.”

Additionally, Goff — former Andeavor chairman, CEO and president — said he is “fully supportive” of Heminger as Marathon’s CEO.

Marathon, based in Findlay, operates a refinery in southwest Canton that has 340 employees. It processes 93,000 barrels per day, including oil collected from Utica Shale wells in southeast Ohio.

Marathon is the majority owner in a partnership that operates MPLX, an oil and natural gas gathering network with operations in Stark County and the Utica Shale. The company also owns the Speedway gas and convenience store chain, which operates as a subsidiary.

Last year, Marathon expanded into the western United States with the acquisition of Andeavor. The combination gave the company 16 refineries, extensive pipeline systems and a national network of convenience stores.

“The strategic combination between MPC and Andeavor was an excellent move. After one year of integrating the business, we have made great progress,” Goff said in the presentation for employees.

Elliott Management doesn’t share those sentiments.

The investment firm, which owns 2.5% of Marathon’s stock, recently announced its belief that Marathon would be more valuable if the three primary businesses were split and operated as separate companies. The proposal is similar to action taken in 2013 when investors pushed for Timken Co. to spin off its steel business, which led to creation of TimkenSteel.

Under Elliot’s proposal, the three companies would be:

• Speedway standing alone as a retail business. It would be the largest U.S.-listed convenience store operator.

• MPLX would stand alone as a midstream business moving oil and natural gas from wells to refineries and processors. It would be among the five largest in the country.

• The refining operation would become the country’s largest independent merchant refiner.

In a video shared with employees, Heminger said the company remains committed to building shareholder value. He credited employees for their efforts to bring Marathon and Andeavor operations together and improve efficiencies.

Marathon managers asked that employees not be distracted by rumors generated because of Elliott Management’s proposals.

Edd Pritchard

Akron Beacon Journal (TNS)

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