NEW YORK ( The Deal) -- Activist embattled oil and gas company Hess ( HES) said Thursday, May 22, it agreed to sell its gas stations to Speedway LLC, a unit of Marathon Petroleum ( MPC), for about $2.87 billion.
The price includes $2.37 billion in cash, an estimated $230 million in working capital and $274 million in capital leases.
Speedway president Tony Kenney claimed the deal will make it the largest company owned-and-operated convenience store chain in the U.S. based on revenue and the second largest by store count. Hess Retail is the largest along the East Coast with 1,342 locations and the fifth largest in the U.S. by company-operated sites with 1,256 stores in 16 states. Speedway is the fourth-largest by company owned-and-operated sites with 1,480 stores in nine states.
Based on 2013 data, the combined company would have sales of $27 billion, 6.2 billion gallons of annual fuel sales and $4.8 billion of annual merchandise sales at 2,700 retail locations.
New York City-based Hess said it will use the proceeds for additional share repurchases, which have been boosted to $6.5 billion from $4 billion. Since the beginning of the program in August 2013, the company has repurchased $2.8 billion in stock.
Hess CEO John Hess said in a statement that the sale marks the culmination of its strategic transformation into a pure-play exploration and production company.
Hess expects to complete the sale by year-end. Marathon Petroleum thinks it will close late in the third quarter if it clears regulators and will pay for it with debt and available cash.