The week starts with a deal between the American Marathon Petroleum and the Japanese 7-Eleven (Seven & i Holdings).
The American petroleum refining company and the Japanese group reached an agreement after five months of postponing due to the pandemic outbreak. The Ohio-based company will sell its Speedway gas stations in the United States for $21 billion. Speedway is allegedly worth $18 billion, debt included.
The after-tax proceeds from the sales are around $16.5 billion, and according to Marathon, the money will be used to pay the existing debt.
The deal is to be closed in the first quarter of 2021 and includes an agreement of 15-year fuel supply for 7.7 billion gallons yearly provided by the most significant US refiner by volume. By the deal, the annual growth in 7- Eleven's operating income in the first three years after the transaction is speculated to exceed 15%.
From the deal, 7- Eleven is looking to reach up to $575 million of synergies (“potential financial benefit achieved through the combining of companies” – according to investopedia.com) in three years or less after the deal closes.
From analysts' and investors' point of view, it is normal for Seven & i to expand in North America. The deal will help the Japanese company multiply its portfolio with US gas stations and stores, shifting its focus from Japan's saturated market.
During today’s pre-market, Marathon Petroleum stock is trading higher by more than 15%.
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Sources: reuters.com, prnewswire.com, finance.yahoo.com, investopedia.com