Fresh off an activist success at LifeLock (LOCK) , insurgent manager Elliott Management LLC's Paul Singer on Monday launched a campaign urging Marathon Petroleum (MPC) to take a look at splitting itself up into three businesses.
Shares of the Findlay, Ohio-based petroleum company shot upwards on the announcement of the campaign, trading up over 5% to $45.73 a share early Monday. The activist fund reported owning a 4.1% common equity stake at the same time that it issued a 50-page presentation offering a raft of suggestions for the $23 billion in market capitalization energy company. One main recommendation is for Marathon Petroleum to consider a full strategic review over whether a tax-free separation of the company into three businesses would best serve shareholders over the long-term.
"The valuation uplift from such an action is compelling... peer valuations show that such an action would result in an 80 (plus)% increase to Marathon's stock price," Elliott Management portfolio manager Quentin Koffey said in the letter.
And Elliott Management would likely get some serious support from other activists invested in the stock. According to FactSet, insurgents Jana Partners LLC's Barry Rosenstein and Corvex Management LP's Keith Meister each own small stakes in Marathon Petroleum.
In the letter, Koffey suggests that Marathon could create three separate businesses from its refining operations, midstream crude oil transportation business and its Speedway gasoline and convenience store operations. He also questioned whether Marathon should consider just spinning off the Speedway gasoline and convenience store businesses as an alternative.