Marathon (MPC) Names New Director, Provides Strategy Update

Marathon Petroleum Corporation (NYSE:MPC) recently announced that it has entered into an agreement with activist investor Elliott Management wherein the former appointed Jonathan Cohen as a board member. The incumbent director Greg Goff, who will retire by this year-end, will hand over his duties officially to his successor thereafter.

Jonathan Cohen, the former founder and executive of multiple energy-related businesses in the E&P and midstream sectors including Atlas Pipeline Partners LP and the general partner of Arc Logistics Partners LP will shortly join the special committee of the Marathon Petroleum board. He will undertake responsibilities like evaluating options for the midstream business and oversee the Marathon Petroleum CEO search process, which is already on track. Management earlier informed that Gary R. Heminger, chairman and CEO, is planning to quit in 2020.

Additionally, appointment of an independent advisor in Marathon Petroleum’s special committee for evaluating midstream options in a non-voting capacity was announced. Further updates on the formation of the special midstream committee will be provided in early 2020.

Claiming that the company suffered a long-term undervaluation in the equity market, Elliott had earlier this year, recommended a split to help the company better its business scale while enhancing its shareholder value.

In this proposal, Elliott had advised the company to disintegrate into three distinct independent concerns, namely RetailCo turning into an autonomous Speedway, MidstreamCo converting to MPLX LP (NYSE:MPLX) and RefiningCO transforming into New Marathon.

Elliott, which holds nearly 2.5% stake in Marathon Petroleum, believes that with this split, the latter will be able to achieve a $22-billion boost to its shareholder value as well as a $17-billion incentive to enable the company to develop its refining, retailing and marketing businesses. Further, the same could drive its stock value by almost 61% from the current levels.

Notably, this Findlay, OH-based leading independent refiner, transporter and marketer of petroleum products is working on forming the largest U.S. listed convenience store operator by separating Speedway from its parent platform into an independent publicly traded company. The transaction, contingent upon pending approvals, is scheduled to close by the end of 2020.

Zacks Rank & Other Key Picks

Marathon Petroleum currently carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the energy space include Phillips 66 (NYSE:PSX) and Valero Energy Corporation (NYSE:VLO) , each carrying the same solid Zacks Rank as Marathon Petroleum. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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