Marathon to buy retail unit from Hess for $2.87 billion

This article was corrected May 22.

Speedway LLC, a subsidiary of Marathon Petroleum Corp. (MPC), has agreed to acquire Hess Retail Holdings LLC, the East Coast’s largest chain of company operated retail outlets and convenience stores with 1,342 locations, from Hess Corp. for $2.87 billion.

The transaction, expected close late in the third quarter, includes all of Hess’s retail locations, transport operations, and shipper history on various pipelines, including 40,000 b/d on Colonial Pipeline.

“This will be a significant acquisition for Speedway, as we will become the largest company owned and operated convenience store chain in the nation based upon revenue and the second largest by store count," said Tony Kenney, Speedway president.

Gary R. Heminger, MPC president and chief executive officer, expanded on Kenney’s comments, saying, “This acquisition will be transformative for MPC 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.

“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 b/d of assured sales from our refining system,” Heminger said, adding that “the combined business will have 2013 pro forma revenues of more than $27 billion, 6.2 billion gal of annual fuel sales, and $4.8 billion of annual merchandise sales at more than 2,700 retail locations.”

John B. Hess, Hess chief executive officer, said, “The sale of our retail business marks the culmination of our strategic transformation into a pure-play exploration and production company.”

Hess in November 2013 completed the sale of its energy marketing business to Direct Energy, a subsidiary of Centrica PLC, for $1.2 billion (OGJ Online, Nov. 1, 2013). Last month, the company sold its interests in Thailand’s Sinphuhorm and Pailin fields to PTT Exploration & Production PCL (PTTEP) for $1 billion (OGJ Online, Apr. 23, 2014).