Energy Companies to Merge in $15.8 Billion Deal
A partnership controlled by Marathon Petroleum Corp., a refinery and pipeline company, will buy MarkWest Energy Partners LP for $15.8 billion in one of the biggest oil-patch deals since crude prices began to slump last summer.
The deal will marry Marathon’s oil pipeline network with MarkWest’s business separating natural gas into fuels such as propane and ethane.
The combined company would have a market capitalization of $21 billion, making it the fourth-largest master limited partnership. These partnerships, which typically own infrastructure like pipelines that earn steady revenue from long-term contracts, have fared better than traditional drilling companies during the energy downturn but still have faced headwinds.
Gary R. Heminger, Marathon’s chief executive, said the deal would allow the partnership to boost its annual distribution by 25% through 2017.
“The combination significantly increases our size, scale and the opportunity to grow over a very long period of time,” Mr. Heminger told analysts during a conference call on Monday.
Shares of MPLX were down 16% to $58 on the news in afternoon trading, while shares of MarkWest rose nearly 13% to $67.34. Shares of Marathon Petroleum Corp. rose 7.98% to $58.84.