Marathon Petroleum Names Midstream Boss as New CEO, Will Retain Unit
(Reuters) — Marathon Petroleum Corp on Wednesday tapped the head of its midstream business, Michael Hennigan, as its new chief executive officer and said it will retain the unit despite demands from shareholder Elliott Management to separate it.
Hennigan replaces company veteran Gary Heminger, whose departure was announced in October when the largest U.S. independent refiner launched a sweeping restructuring that included a strategic review of the midstream business MPLX LP and the spinoff of its Speedway retail operation.
Billionaire Paul Singer’s Elliott had last year renewed its demand for Marathon to split its business into three separate companies, saying that would boost shareholder value by as much as $40 billion.
The hedge fund, later joined by other shareholders, also demanded the ouster of Heminger.
Marathon said separating the unit would have been cash-flow negative to it and would have taken up about $11 billion to $15 billion of resources that could instead be returned to shareholders.
Analysts at Credit Suisse said Hennigan’s appointment could have been the influential factor that made Marathon decide against a ‘transaction-oriented’ conclusion of the review.
They added that the decision was the best outcome for MPLX as other alternatives would have been dilutive to its shareholders.
Reuters reported last week that Marathon was considering a sale of MPLX’s gathering and processing (G&P) business, worth as much as $15 billion of MPLX LP, looking for a cash boost as the coronavirus outbreak and lower oil prices weighed on its prospects.
Hennigan will take over immediately, the company said.
Earlier this month, there were reports that 7-Eleven franchise owner Seven & i Holdings had abandoned the idea of buying Speedway after balking at the $22 billion price tag that Marathon set for it. The company’s shares were down over 8.8% in early trading on Wednesday amid a broader decline in oil and gas stocks as U.S. crude hit an 18-year low.
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