Marathon MLP to Acquire MarkWest for $20 Billion

FINDLAY, Ohio – A subsidiary of Marathon Petroleum Corp., MPLX L.P., announced Monday that it has signed a definitive merger agreement with Denver-based MarkWest Energy Partners L.P. valued at $20 billion.

MarkWest is the largest natural-gas processor and fractionator in the Utica shale in eastern Ohio and the Marcellus shale in western Pennsylvania and West Virginia.

The merger would be a unit-for-unit transaction and result in the fourth-largest master limited partnership, or MLP, with a market capitalization of $21 billion. Under the agreement, MarkWest would become a wholly owned subsidy of MPLX under the direction of Marathon and the deal should close in the fourth quarter.

Under the terms of the agreement, MarkWest shareholders would receive 1.09 common units of MPLX and a one-time cash payment of $3.37 per common unit, for total consideration of $78.64 per common unit.

MPLX Chairman and CEO Gary R. Heminger said that as part of the combination, MPLX affirms its anticipated distribution growth of 29% this year and expects a 25% compound annual distribution growth for the combined entity through 2017.

“Our strategic combination with MarkWest would result in a large-cap, diversified MLP with an exceptional growth profile,” Heminger said. “This transaction creates a tremendous platform for the combined partnership to continue to grow distributable cash flow and creates significant long-term value for the unitholders.”

MarkWest operates a large processing and fractionation complex in Cadiz, Ohio, and another complex in Hopedale. The operations separate dry natural gas from natural-gas liquids, and then process the wet gas into products such as butane, ethane and propane.

Marathon is developing a pipeline and truck-barge system in Wellsville, Ohio, that is capable of loading and transporting liquids and condensate along the Ohio River to Marathon refineries.

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