Following the breakdown of negotiations in early March, both parties have agreed to sell the Speedway gas stations, owned by Marathon Petroleum, to 7-Eleven, a Japanese convenience store company. The operation will cost the Japanese company $21 billion, which in exchange will add 3,900 gas station stores to the 9,800 it has in the United States. |
Americans will now have more 7-Eleven outlets where they can buy some of the classics of this convenience store chain of Japanese origin: from bear-shaped candies and cheese and bean burritos to mini donuts or a phone charger.
Seven & i Holdings Co., the world’s largest convenience store franchise and owner of the 7-Eleven brand, will take over the gas stations in , which is the largest oil refinery in the United States. A growth opportunity for the Japanese company in a difficult year, but in which Marathon’s stock market value has plummeted.
The agreement reached between the parties is the second largest acquisition of a US company in 2020, and at 21,000 million dollars it is the most expensive operation that Seven & i has ever carried out.
The Japanese firm has 69,000 stores around the world, bought Sunoco gas stations three years ago for 3.3 billion dollars and now the American ones. “It’s a historic first step as we seek to become a global retailer,” Ryuichi Isaka, the company’s CEO, said in a statement reported by Bloomberg.
The Seven & i share price fell by almost 6% this Monday, while that of Marathon Petroleum was trading positive but flat at mid-session.
Marathon shares have lost 37% of their value since January and their price is around $38. However, at the worst moment of the correction in March, it sank 72%.
Marathon aims to reduce capex by $1.4 billion and operating costs by about $950 million
The month of July ended with a positive balance of 2.2%: the fourth consecutive month of rise, although of the last four it has been the one with the smallest rise. Now, the stock is 40% away from the annual maximum that it registered at $61.91 in January and 82% of the 23 analysts who follow the American company advise buying its titles, according to the market average collected by Bloomberg.
The American firm, which emerges from its gas station business, has presented the results for the second quarter of 2020 on Monday. Its sales have been 13,649 million euros, although the market consensus expected 14,421 million. The effects of the pandemic and the consequent drop in demand have been noted: in the same quarter last year, the company entered 29,858 million euros.
“The recovery in fuel demand in the United States has slowed in recent weeks as Covid-19 cases have increased in many parts of the country,” Marathon Petroleum management told Bloomberg.
Speedway sale could generate $16.5 billion of after-tax cash
“Demand in the Southwest, for example, has weakened as cases have risen,” said Brian Partee, vice president of marketing. From the company they expect that the demand for fuel in August in the United States will be similar to that of July, but they see the forecast for September as less clear.
The crisis unleashed by the pandemic has swept away some refineries, such as the one in Martinez, in California, which will close its doors forever, as announced by Marathon. The refinery employed some 740 people and produced 161,000 barrels a day of gasoline, diesel and distillates. From now on, it could be used to store oil.
Its closure is part of Marathon’s strategy to recover from the crisis. The American company at 1,400 million dollars and operating costs at about 950 million dollars, according to Bloomberg. A fact this last one that they hope to achieve this year.
The Speedway sale could generate $16.5 billion of after-tax cash, which Marathon would use to reduce debt and remunerate shareholders, the company reports. In addition, the agreement with 7-Eleven would include the supply of oil for 15 years.
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