- One-time cash payment from MPC
raised to $1.075 billion from $675 million
- Total cash consideration of ~$5.21
per unit substantially enhances value to MarkWest
unitholders
- MarkWest board and executive
management affirm their support for the transaction and its revised
terms
- Supplemental proxy cards being
mailed to unitholders
- Special unitholder meeting scheduled
for Dec. 1, 2015
MPLX LP (NYSE: MPLX) and MarkWest Energy Partners, L.P. (NYSE:
MWE) (MarkWest) today announced that in connection with the merger
of MPLX and MarkWest, MPLX has agreed to increase the amount of the
cash consideration payable to MarkWest common unitholders by $400
million, from $675 million to $1.075 billion. Under the revised
terms of the merger agreement, MarkWest common unitholders will
receive 1.09 MPLX common units plus a one-time cash payment of
approximately $5.21 per MarkWest common unit, for a total
consideration of approximately $52.93 per MarkWest common unit,
based on fully diluted units currently outstanding and the closing
price of MPLX’s common units on Nov. 10, 2015. The increase in cash
merger consideration is being contributed to MPLX by its sponsor,
Marathon Petroleum Corporation (NYSE: MPC), under which no new
equity units will be issued to MPC. In addition, as part of the
original transaction, MPC will contribute approximately $225
million, based on the price of MPLX’s common units on Nov. 10,
2015, to maintain its 2 percent general partner interest in MPLX.
These proceeds will be retained by the partnership to support its
growth.
All other terms of the merger agreement announced on July 13,
2015, remain the same. The merger is recommended by the boards of
directors of MPC, MPLX and MarkWest, and the executive management
of both partnerships also strongly support the transaction and its
revised terms.
The proposed transaction will combine MarkWest, the
second-largest processor of natural gas in the United States and
largest processor and fractionator in the Marcellus and Utica shale
plays, with MPLX, a rapidly growing crude oil and refined products
logistics partnership sponsored by MPC. The combination will create
one of the largest master limited partnerships (MLPs) and is
expected to generate a mid-20 percent compound annual distribution
growth rate through 2019.
“The enhancement to the terms of our agreement reflects the
commitment of MPLX and its sponsor, MPC, to the combination with
MarkWest and our conviction that the transaction will create
significant benefits for the unitholders, customers and employees
of both partnerships,” said Gary R. Heminger, MPLX chairman and
chief executive officer. “This increase substantially enhances the
transaction value for MarkWest unitholders, who will not only
benefit from significant distribution growth, but also a
substantially lower equity yield, investment-grade debt funding
costs, enhanced access to capital and liquidity, and a strong
general partner prepared to provide support and financial
flexibility.”
Even in a challenging environment of lower MLP valuations and
higher yields, and in continued support of the combination, MPLX
recently affirmed its guidance that creates a mid-20 percent
compound annual distribution growth profile through 2019, including
a 25 percent distribution growth rate in 2016. Heminger noted that
MPC, as the sponsor and general partner, has extensive options
available to support the growth profile of the combined
partnership, including dropping down the large and growing $1.6
billion inventory of MLP-qualifying earnings before interest,
taxes, depreciation and amortization.
“The increased cash consideration and ownership of a higher
growth MLP with a strong sponsor provides even more compelling
value for MarkWest unitholders, who will own approximately 73
percent of the combined partnership when the transaction is
completed,” said Heminger. “Both partnerships’ unitholders can
share in the strong upside potential of a combined partnership with
multiple operational platforms as well as significant growth and
commercial synergy opportunities. Coupled with MarkWest’s $1.5
billion average annual organic capital growth program over the next
five years, our substantial resources and strong sponsor will
support the combined partnership in unlocking an incremental $6
billion to $9 billion of potential organic growth projects,” said
Heminger.
“Our Board continues to support the combination with MPLX and
recommends that MarkWest unitholders vote in favor of the merger
proposal,” said Frank M. Semple, MarkWest chairman, president and
chief executive officer. “The long-term strategic value of the
combination with MPLX and the support from Marathon Petroleum is
compelling. The increased cash contribution of $400 million
substantially enhances the value of the transaction for our
unitholders. We are excited to complete the transaction and
continue the important work of developing critical midstream
projects for our producer customers, and delivering significant
unitholder value over the long term.”
The transaction is subject to approval by MarkWest unitholders
and other customary closing conditions and, subject to the
satisfaction of those conditions, is expected to close in December
2015. The date of the special meeting of MarkWest common
unitholders is Dec. 1, 2015. MarkWest unitholders of record as of
Oct. 5, 2015, will be entitled to vote on approval of the merger
and the associated proposals.
MarkWest unitholders are urged to vote “FOR” the merger and
related matters and submit their proxy as promptly as possible,
either by telephone, via the internet or by marking, signing and
dating the proxy card that was provided to unitholders along with
the proxy statement and prospectus.
MarkWest expects to mail supplemental proxy materials to its
unitholders in the near future.
About MPLX LP
MPLX is a fee-based, growth-oriented master limited partnership
formed in 2012 by Marathon Petroleum Corporation to own, operate,
develop and acquire pipelines and other midstream assets related to
the transportation and storage of crude oil, refined products and
other hydrocarbon-based products. Headquartered in Findlay, Ohio,
MPLX’s assets consist of a 99.5 percent equity interest in a
network of common carrier crude oil and products pipeline assets
located in the Midwest and Gulf Coast regions of the United States
and a 100 percent interest in a butane storage cavern located in
West Virginia with approximately 1 million barrels of natural gas
liquids storage capacity.
About MarkWest Energy Partners
MarkWest Energy Partners, L.P. is a master limited partnership
that owns and operates midstream service businesses. MarkWest has a
leading presence in many natural gas resource plays including the
Marcellus Shale, Utica Shale, Huron/Berea Shale, Haynesville Shale,
Woodford Shale and Granite Wash formation.
This press release contains forward-looking statements within
the meaning of federal securities laws regarding MPLX LP (“MPLX”),
Marathon Petroleum Corporation (“MPC”), and MarkWest Energy
Partners, L.P. (“MWE”). These forward-looking statements relate to,
among other things, expectations, estimates and projections
concerning the business and operations of MPLX, MPC, and MWE. You
can identify forward-looking statements by words such as
“anticipate,” “believe,” “estimate,” “objective,” “expect,”
“forecast,” “guidance,” “imply,” “plan,” “project,” “potential,”
“could,” “may,” “should,” “would,” “will” or other similar
expressions that convey the uncertainty of future events or
outcomes. Such forward-looking statements are not guarantees of
future performance and are subject to risks, uncertainties and
other factors, some of which are beyond the companies’ control and
are difficult to predict. In addition to other factors described
herein that could cause MPLX’s or MWE’s actual results to differ
materially from those implied in these forward-looking statements,
negative capital market conditions, including a persistence or
increase of the current yield on common units, which is higher than
historical yields, could adversely affect MPLX’s ability to meet
its distribution growth guidance, particularly with respect to the
later years of such guidance. Factors that could cause MPLX’s or
MWE’s actual results to differ materially from those implied in the
forward-looking statements include: the ability to complete the
proposed merger of MPLX and MWE on anticipated terms and timetable;
the ability to obtain approval of the transaction by the
unitholders of MWE and satisfy other conditions to the closing of
the transaction contemplated by the merger agreement; risk that the
synergies from the MPLX/MWE transaction may not be fully realized
or may take longer to realize than expected; disruption from the
MPLX/MWE transaction making it more difficult to maintain
relationships with customers, employees or suppliers; risks
relating to any unforeseen liabilities of MWE or MPLX, as
applicable; the adequacy of MPLX’s and MWE’s respective capital
resources and liquidity, including, but not limited to,
availability of sufficient cash flow to pay distributions, and the
ability to successfully execute their business plans and implement
their growth strategies; the timing and extent of changes in
commodity prices and demand for crude oil, refined products,
feedstocks or other hydrocarbon-based products; volatility in
and/or degradation of market and industry conditions; completion of
pipeline capacity by competitors; disruptions due to equipment
interruption or failure, including electrical shortages and power
grid failures; the suspension, reduction or termination of MPC’s
obligations under MPLX’s commercial agreements; each company’s
ability to successfully implement its growth plan, whether through
organic growth or acquisitions; modifications to earnings and
distribution growth objectives; federal and state environmental,
economic, health and safety, energy and other policies and
regulations; changes to MPLX’s capital budget; other risk factors
inherent to MPLX or MWE’s industry; and the factors set forth under
the heading “Risk Factors” in MPLX’s Annual Report on Form 10-K for
the year ended Dec. 31, 2014, filed with the Securities and
Exchange Commission (SEC); and the factors set forth under the
heading “Risk Factors” in MWE’s Annual Report on Form 10-K for the
year ended Dec. 31, 2014, and Quarterly Report on Form 10-Q for the
quarter ended September 30, 2015, filed with the SEC. These risks,
as well as other risks associated with MPLX, MWE and the proposed
transaction, are also more fully discussed in the joint proxy
statement and prospectus included in the registration statement on
Form S-4 filed by MPLX and declared effective by the SEC on October
29, 2015. Factors that could cause MPC’s actual results to differ
materially from those implied in the forward-looking statements
include: risks described above relating to the MPLX/MWE proposed
merger; changes to the expected construction costs and timing of
pipeline projects; volatility in and/or degradation of market and
industry conditions; the availability and pricing of crude oil and
other feedstocks; slower growth in domestic and Canadian crude
supply; an easing or lifting of the U.S. crude oil export ban;
completion of pipeline capacity to areas outside the U.S. Midwest;
consumer demand for refined products; transportation logistics; the
reliability of processing units and other equipment; MPC’s ability
to successfully implement growth opportunities; modifications to
MPLX earnings and distribution growth objectives; federal and state
environmental, economic, health and safety, energy and other
policies and regulations; MPC’s ability to successfully integrate
the acquired Hess retail operations and achieve the strategic and
other expected objectives relating to the acquisition; changes to
MPC’s capital budget; other risk factors inherent to MPC’s
industry; and the factors set forth under the heading "Risk
Factors" in MPC’s Annual Report on Form 10-K for the year ended
Dec. 31, 2014, filed with SEC. In addition, the forward-looking
statements included herein could be affected by general domestic
and international economic and political conditions. Unpredictable
or unknown factors not discussed here, in MPLX’s Form 10-K, in
MPC’s Form 10-K, or in MWE’s Form 10-K and Form 10-Qs could also
have material adverse effects on forward-looking statements. Copies
of MPLX’s Form 10-K are available on the SEC website, MPLX’s
website at http://ir.mplx.com or by contacting MPLX’s Investor
Relations office. Copies of MPC’s Form 10-K are available on the
SEC website, MPC’s website at http://ir.marathonpetroleum.com or by
contacting MPC’s Investor Relations office. Copies of MWE’s Form
10-K and Form 10-Qs are available on the SEC website, MWE’s website
at http://investor.markwest.com or by contacting MWE’s Investor
Relations office.
Additional Information and Where to Find It
This communication may be deemed to be solicitation material in
respect of the proposed acquisition of MWE by MPLX. In connection
with the proposed acquisition, MWE and MPLX have filed relevant
materials with the SEC, including MPLX’s registration statement on
Form S-4 that includes a definitive joint proxy statement and a
prospectus and was declared effective by the SEC on October 29,
2015. Investors and security holders are urged to read all relevant
documents filed with the SEC, including the definitive joint proxy
statement and prospectus, because they contain important
information about the proposed transaction. Investors and security
holders are able to obtain the documents free of charge at the
SEC’s website, http://www.sec.gov, or for free from MPLX LP at its
website, http://ir.mplx.com, or in writing at 200 E. Hardin Street,
Findlay, Ohio 45840, Attention: Corporate Secretary, or for free
from MWE by contacting Investor Relations by phone at 1-(866)
858-0482 or by email at investorrelations@markwest.com.
Participants in the Solicitation
This communication is not a solicitation of a proxy from any
investor or securityholder. However MPLX and MWE and their
respective directors and executive officers and certain employees
may be deemed to be participants in the solicitation of proxies
from the holders of MWE common units with respect to the proposed
transaction. Information about MPLX’s directors and executive
officers is available in MPLX’s Annual Report on Form 10-K filed
with the SEC on February 27, 2015 and MPLX’s current report on Form
8-K, as filed with the SEC on March 9, 2015. Information about
MWE’s directors and executive officers is set forth in the proxy
statement for MWE’s 2015 Annual Meeting of Common Unitholders,
which was filed with the SEC on April 23, 2015 and MWE’s current
reports on Form 8-K, as filed with the SEC on May 5, 2015, May 19,
2015 and June 8, 2015, and in the definitive joint proxy statement
filed by MPLX, which was declared effective by the SEC on October
29, 2015. To the extent holdings of MWE securities have changed
since the amounts contained in the definitive joint proxy statement
filed by MPLX, which was declared effective by the SEC on October
29, 2015, such changes have been or will be reflected on Statements
of Change in Ownership on Form 4 filed with the SEC. Investors may
obtain additional information regarding the interest of such
participants by reading the definitive joint proxy statement and
prospectus regarding the acquisition. These documents may be
obtained free of charge from the SEC’s website http://www.sec.gov,
or from MWE and MPLX using the contact information above.
Non-Solicitation
This communication shall not constitute an offer to sell or the
solicitation of an offer to sell or the solicitation of an offer to
buy any securities, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offer of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as
amended.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151110007096/en/
MPLX Investor Relations Contacts:Geri Ewing, 419-421-2071
or Teresa Homan, 419-421-2965orMPLX Media Contacts:Chuck
Rice, 419-421-2521 or Jamal Kheiry, 419-421-3312orMarkWest
Investor Relations and Media Contact:Joshua Hallenbeck,
866-858-0482
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