Marathon's Speedway Will Acquire Hess

Marathon (NYSE: MPC) announced Thursday that its subsidiary, Speedway, will acquire Hess (NYSE: HES) for a total consideration of $2.874 billion.

The acquisition, which is expected to close late in the third quarter of 2014, will be funded through a combination of cash and debt.

Marathon President and CEO Gary Heminger commented, "This acquisition represents an important step in our long-term strategy by accelerating Speedway's planned growth into contiguous markets and supporting the goal of generating $1 billion of earnings before interest, taxes, depreciation and amortization."

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Before the acquisition, Speedway represented the fourth-largest company-owned and operated convenience store chain, while Hess ranked fifth. After the combination the total store count will jump to over 2,700 nationwide. Additionally, the combined business would bring in more than $27 billion in 2013 pro forma revenues, 6.2 billion gallons of annual fuel sales and $4.8 billion of annual merchandise sales.

Speedway President Tony Kenney commented, "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."

In response to Marathon's announcement, Hess provided its own press release in which it stated it will use the proceeds from the sale for additional share repurchases. This has led the company to increase its share repurchase authorization from $4 billion to $6.5 billion.

John B. Hess, CEO of Hess, commented, "The sale of our retail business marks the culmination of our strategic transformation into a pure-play exploration and production company."

The full press release from both Marathon and Hess are available through Benzinga.com.