Elliott :Marathon Petroleum Can Unlock $14bln - $19bln In Value For Shareholders

(RTTNews) - Elliott Management Corp., which manages funds that collectively beneficially own 4% of the common stock and equivalents of Marathon Petroleum Corp. (MPC), sent a letter to the Board of Marathon making recommendations that would unlock $14 billion - $19 billion for shareholders. Elliott urged Marathon should consider separating its chain of gasoline and convenience stores or break into three businesses which would be focused on retailing, refining and midstream operations which hold pipeline and storage assets.

MPC is currently trading at $45.94, up $2.63 or 6.07 percent.

In the letter and presentation, Elliott outlined recommendations that could result in an uplift of 60% - 80+% in the Company's stock by immediately dropping down all MLP-qualifying assets to MPLX and conducting a full strategic review of the Company.

Elliott noted that Marathon's undervaluation is most glaring when the value of its three businesses is summed together. In the accompanying presentation Elliott lay out how public equity market valuations of comparable companies clearly support valuations of about $10.5 billion for Speedway, about $10.5 billion for Marathon's refining operations, and about $26 billion for Marathon's midstream holdings (including cash proceeds from drop downs). This $47 billion total valuation, net of debt at Marathon, equals an equity valuation ~80+% higher than what Marathon shareholders receive today.

Elliott said it understood that the above sum of the parts analysis requires assumptions on valuation for three different sectors (Retail, Refining, and Midstream). But what is most striking about the undervaluation is that even if every single one of Marathon's separate businesses traded at the lowest EBITDA multiple or highest yield of any relevant peer, the sum of Marathon's businesses would still be about $12 billion higher than today's valuation (representing a 50+% increase in Marathon's current share price).