Marathon To Sell Its Speedway Gas Stations To Japanese Parent Of 7-Eleven For $21 Billion

Marathon Petroleum Corp. (MPC) said on Sunday that it entered into a definitive agreement to sell its Speedway gas stations to the Japanese owner of the 7-Eleven convenience store franchise for $21 billion in cash.

7-Eleven Inc. is a wholly owned, indirect subsidiary of Seven & i Holdings Co. Ltd. of Tokyo.

Seven & i Holdings said the deal will add about 3,900 stores to the 9,800 locations currently operated by its 7-Eleven unit.

Bloomberg reported that Seven & i Holdings is the world’s largest convenience-store franchiser with 69,000 stores worldwide including 7-Eleven outlets and the Ito-Yokado supermarkets in Japan.

“This is a historic first step as we seek to become a global retailer,” Seven & i Holdings Chief Executive Officer Ryuichi Isaka said on Monday. “The coronavirus is not going to go on forever.”

Seven & i Holdings has been eager to extend its businesses overseas.

“Japan’s convenience store market is at its limit as the population ages,” Hiroaki Watanabe, a logistics analyst, told Bloomberg. “There will be a short-term impact from the coronavirus in the U.S., but long-term the population there will keep growing.”

The transaction, which is subject to customary closing conditions and regulatory approvals, is expected to close in the first quarter of 2021.

Marathon said it expected to receive after-tax cash proceeds of about $16.5 billion in the deal. These funds will be used to “both repay debt to protect the company’s investment grade credit profile and return capital to shareholders.”

The transaction will also include a 15-year fuel supply agreement for about 7.7 billion gallons per year associated with the Speedway business. Marathon also expects “incremental opportunities over time to supply 7-Eleven's remaining business as existing arrangements mature and as 7-Eleven adds new locations” in U.S. and Canada.

"This transaction marks a milestone [in] the strategic priorities we outlined earlier this year," said Michael J. Hennigan, Marathon’s president and chief executive officer. "[This transaction] crystalizes the significant value of the Speedway business, creates certainty around value realization and delivers on our commitment to unlock the value of our assets. At the same time, the establishment of a long-term strategic relationship with 7-Eleven creates opportunities to improve our commercial performance."

Marathon had been under pressure from key investors to unload its retail outlets.

Earlier this year, Marathon took a $12.4 billion first quarter charge while suspending share repurchases and cut spending by 30%.