As announced earlier this week and officially confirmed now, after a 10-month strategic review process, Marathon Petroleum Corp. (MPC) is spinning off Speedway LLC.
The retail network will become an independent company by year-end 2020. Upon completion of the spinoff, Speedway will be the largest U.S.-listed convenience store operator "boasting a coast-to-coast retail network and a nationally recognized brand,”, according to MPC Chairman and CEO Gary Heminger.
The energy company kicked off the strategic review in January following MPC's tie-up with Andeavor. That transaction closed on Oct. 1, 2018, creating a coast-to-coast retail powerhouse.
Under the plan, the new Speedway will consist of all of MPC's company-owned and company-operated convenience stores — which collectively generate $1.5 billion of annual EBITDA.
MPC will retain its direct dealer business, which primarily operates on the West Coast. This separately managed business within the retail segment is only fuel supply with no merchandise sales, he noted.
One of the key drivers behind the spinoff decision, according to Heminger, was the recent growth in Speedway's scale and earnings power.
"The number of stores has nearly tripled since 2011 to roughly 4,000 and the membership within our Speedy Rewards loyalty program has nearly doubled," he noted.
In addition to the Speedway spinoff, MPC has created a special committee to review midstream alternatives, Heminger reported, adding that "unlocking value within the midstream is more complex than the separation of Speedway."
Among the potential midstream alternatives are asset and business divestitures. MPC hopes to complete the review process by its first-quarter 2020 earnings call.
MPC also announced several leadership moves, including Heminger's decision to retire after the first quarter of 2020. The board appointed a committee to consider internal and external candidates to succeed Heminger. A nationwide search is underway.
In addition, Greg Goff, executive vice chairman of MPC and a member of the boards of MPC and MPLX's general partner, will retire effective Dec. 31 of this year.
Michael J. Hennigan, current president of MPLX GP LLC, has been appointed CEO of the same organization, effective Nov. 1. Frank M. Semple will succeed Goff as a member of the MPC board.