Summary
MPLX LP (MPLX) announced on July 13, 2015, that it entered into a definitive merger agreement to acquire MarkWest Energy Partners, L.P. (MWE) in a unit-for-unit transaction with a cash component. This strategic combination aims to create a larger, more diversified master limited partnership (MLP) with a combined market capitalization of approximately $21 billion, positioning it as the fourth-largest MLP. The merger is expected to be accretive to MPLX's unitholders and is supported by Marathon Petroleum Corporation (MPC), MPLX's sponsor, which will contribute $675 million in cash to fund a portion of the transaction. The combined entity is projected to have a robust distribution growth profile, with MPLX affirming its 2015 distribution growth forecast and expecting a 25% compound annual distribution growth rate through 2017. The transaction leverages complementary assets and geographic footprints, offering significant opportunities for organic growth and operational synergies across gathering, processing, fractionation, and logistics. This move is expected to enhance MPLX's scale, financial strength, and access to capital, solidifying its position as a leading midstream player.
Key Highlights
- 1MPLX LP to acquire MarkWest Energy Partners, L.P. in a unit-for-unit transaction with a cash component.
- 2Implied total enterprise value for MarkWest of approximately $20 billion, including assumption of debt.
- 3MarkWest unitholders to receive 1.09 MPLX common units and approximately $3.37 in cash per unit.
- 4Marathon Petroleum Corporation (MPC) to contribute $675 million cash to fund the cash portion of the transaction.
- 5Creates the fourth-largest MLP with a combined market capitalization of approximately $21 billion.
- 6Projected 25% compound annual distribution growth rate for the combined entity through 2017, with a peer-leading profile thereafter.
- 7Transaction expected to close in the fourth quarter of 2015, subject to unitholder approval and regulatory conditions.