MPLX To Buy MarkWest Energy For Enterprise Value Of $20 Bln, Incl. Debt

(RTTNews) - Marathon Petroleum Corp. (MPC) announced that MPLX LP (MPLX), the midstream master limited partnership or MLP sponsored by MPC, has signed a definitive merger agreement with MarkWest Energy Partners, L.P. (MWE) whereby MarkWest would become a wholly owned subsidiary of MPLX.

The merger would be a unit-for-unit transaction, plus a one-time cash payment to MarkWest unitholders, that implies an enterprise value for MarkWest of about $20 billion, including the assumption of debt of approximately $4.2 billion, as of the close of trading on, July 10, 2015.

MPC would contribute $675 million of cash to MPLX to fund the one-time cash payment.

Under the terms of the merger agreement, which was unanimously approved by the boards of directors of the general partners of MPLX and MarkWest, the common unitholders of MarkWest would receive 1.09 MPLX common units and a one-time cash payment of approximately $3.37 per MarkWest common unit, for total consideration of $78.64 per MarkWest common unit, based on fully diluted units currently outstanding and the closing price of MPLX's units on July 10, 2015.

In addition to the attractive premium of 32 percent based on the July 10, 2015, closing price of $59.75, MarkWest unitholders would participate in the combined partnership's projected peer-leading distribution growth.

MPLX Chairman and Chief Executive Officer Gary R. Heminger said that as part of the combination, MPLX affirms its anticipated distribution growth of 29 percent this year and expects a 25 percent compound annual distribution growth rate for the combined entity through 2017, with the capacity to support a peer-leading distribution growth profile for an extended period of time thereafter.

The transaction between MPLX and MarkWest, which is subject to approval by MarkWest unitholders, customary closing conditions and regulatory approvals, is expected to close in the fourth quarter of 2015.

Upon completion of the transaction, MPC would continue as general partner of MPLX and own approximately 19 percent of MPLX's common units.