Friday, May 25, 2018
Business

Marathon buys Hess retail operations

FINDLAY, Ohio — The Hess name will disappear from gas station signs after a $2.87 billion deal to sell the chain to Marathon Petroleum's Speedway, but the holidays will still see the popular Hess toy truck.

The deal gives Marathon Petroleum the retail operations of Hess, the largest chain of company-operated gas stations and convenience stores on the East Coast.

The Hess stations will be rebranded as Speedway over three years.

It also keeps the Hess toy truck on holiday wish lists. They will be sold at Hess retail stores and online this year. And starting in 2015, Hess plans to sell the toy trucks online.

Hess said this year will mark the 50th anniversary of the toy trucks, an institution on the East Coast, where TV commercials promoting each year's entry are commonly seen.

The deal, which is being orchestrated under subsidiary Speedway, will expand Marathon Petroleum's retail operations from nine to 23 states along the coast and in the Southeast.

Hess has been reshaping itself as a pure production and exploration company since coming under pressure from hedge fund Elliott Capital Management in 2013. Last year, Hess said it would seek a buyer for its retail operations.

The deal announced Thursday consists of $2.37 billion in cash, an estimated $230 million of working capital and $274 million of capital leases.

The transaction includes all of Hess' retail locations, transport operations and shipper history on various pipelines, including about 40,000 barrels per day on Colonial Pipeline that runs from New York to Houston.

The acquisition is expected to close late in the third quarter.

"With this significant geographic expansion, we will be able to further leverage our integrated refining and transportation logistics operations, providing an outlet for an incremental 200,000 (barrels per day) of assured sales from our refining system," Marathon Petroleum CEO Gary Heminger said.

Marathon Petroleum Corp. is itself part of a split in the energy sector in 2012, when Marathon Oil Corp. broke off its refining division so it could focus on exploration and production.

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