MPLX LP agreed to buy MarkWest Energy Partners LP, the second-biggest U.S. processor of natural gas, for about $15.8 billion in stock and cash excluding debt.
The acquisition will be a “unit-for-unit” tax-free transaction including a one-time cash payment to MarkWest unit-holders, MPLX said Monday in a statement.
MPLX is the master-limited partnership formed by Marathon Petroleum, the owner of six refineries in the Midwest and along the Gulf Coast, including a Texas City refinery.
The proposed deal combines the largest processor of gas in the Marcellus and Utica shale regions of Pennsylvania and Ohio with a growing oil and refined products partnership, according to the statement.
Under the merger agreement, MarkWest common unit holders will receive 1.09 MPLX common units and a one-time cash payment of $3.37 a MarkWest unit, or the equivalent of $78.64 a unit, a 32 premium to the July 10 closing price. MPLX’s sponsor, Marathon Petroleum Corp., will contribute $675 million to fund the cash payment.
“The combined entity would further MarkWest’s leading midstream presence in the Marcellus and Utica shales by allowing it to pursue additional dynamic midstream projects,” according to the statement. “In addition, the combination provides significant vertical integration opportunities, as MPC is a large consumer of natural gas liquids.”
The deal is expected to close in the 2015 fourth quarter, subject to approval of MarkWest unitholders and regulatory agencies.