7-Eleven will buy Speedway gas stations for more than $20 billion

Marathon Petroleum Corp. announced Sunday that it and other subsidiaries have entered into a lucrative agreement with 7-Eleven Inc., a wholly owned, indirect subsidiary of Seven & i Holdings Co., Ltd., in which 7-Eleven will acquire Speedway gas stations for $21 billion in cash. (Courtesy Speedway)
Marathon Petroleum Corp. announced Sunday that it and other subsidiaries have entered into a lucrative agreement with 7-Eleven Inc., a wholly owned, indirect subsidiary of Seven & i Holdings Co., Ltd., in which 7-Eleven will acquire Speedway gas stations for $21 billion in cash. (Courtesy Speedway)

Marathon Petroleum Corp. announced Sunday that it and other subsidiaries have entered into a lucrative agreement with 7-Eleven Inc., a wholly owned, indirect subsidiary of Seven & i Holdings Co., Ltd., in which 7-Eleven will acquire Speedway gas stations for $21 billion in cash.

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

“This transaction marks a milestone on the strategic priorities we outlined earlier this year,” Michael J. Hennigan, president and chief executive officer, said in a news release. “Our announcement 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.”

Seven Facts About 7-Eleven

Activist investor Elliott Management has been pushing for a split between Marathon and the popular convenience store operator, which is headquartered in Dallas, according to The Wall Street Journal. The deal will add about 3,900 stores to 7-Eleven’s existing 9,800 in the U.S. and Canada as its Japanese owner tries to diversify away from its slowing home market.

7-Eleven previously purchased 1,000 U.S.-based convenience stores and gas stations from Sunoco for $3.3 billion two years ago. Partly helped by the Sunoco acquisition, 7-Eleven parent company Seven & I’s revenue in North America has grown 50% in the last four fiscal years, while that in Japan has fallen 8%.

According to business insiders, 7-Eleven is set to gain $3 billion of tax benefits and $5 billion of net sale leaseback proceeds. It also hopes to generate $475 million to $575 million of synergies a year, according to The Wall Street Journal. 7-Eleven’s large store network will help move toward achieving that goal, though managing such large-scale cost savings won’t be straightforward. Leveraging on its convenience store expertise, it hopes to sell more goods, which earn higher margins than gasoline, to drivers who have to stop by to fill up their tanks.