Introductory Note
On October 1, 2018, pursuant to the terms of the Agreement and Plan of Merger, dated as of April 29, 2018 (as amended, the “Merger Agreement”) and amended by an Amendment to Agreement of Plan of Merger, dated July 3, 2018 (“Amendment No. 1”), and a Second Amendment to Agreement and Plan of Merger, dated September 18, 2018 (“Amendment No. 2”), by and among Marathon Petroleum Corporation, a Delaware corporation (“MPC”), Andeavor, a Delaware corporation, Mahi Inc., a Delaware corporation and wholly owned subsidiary of MPC (“Merger Sub 1”), and Mahi LLC (n/k/a Andeavor LLC), a Delaware limited liability company and wholly owned subsidiary of MPC (“Merger Sub 2”), Merger Sub 1 merged with and into Andeavor, with Andeavor surviving the first merger as a wholly owned subsidiary of MPC (the “First Merger”). Immediately after the consummation of the First Merger, Andeavor merged with and into Merger Sub 2 with Merger Sub 2 surviving the second merger (the “Surviving Company”) as a wholly owned subsidiary of MPC (the “Second Merger” and, together with the First Merger, the “Merger”).
As previously disclosed, under the terms of the Merger Agreement, subject to the proration, allocation and other limitations set forth in the Merger Agreement and the election materials separately provided to the applicable stockholders, stockholders of Andeavor had the option to elect to receive, for each share of Andeavor common stock held by them of record as of immediately prior to the effective time of the First Merger (the “Effective Time”) (except for excluded shares as more particularly set forth in the Merger Agreement):
| | • | | 1.87 shares of MPC common stock, with cash in lieu of any fractional share of MPC common stock (the “Stock Consideration”); or |
| | • | | $152.27 in cash (the “Cash Consideration”). |
Based on the preliminary prorationing, MPC will pay approximately $3.5 billion in cash and issue 240 million shares of MPC common stock to former holders of Andeavor in connection with the Merger. The final prorationing and the final calculation of the number of shares of MPC common stock issued and the final cash consideration paid in connection with the Merger will be made post-closing after the expiration of the notice of guaranteed delivery period applicable to the cash/stock election.
Subject to the terms and conditions of the Merger Agreement, at the Effective Time, equity awards outstanding under Andeavor’s equity plans ceased to represent equity awards denominated in shares of Andeavor’s common stock and were converted into the right to receive shares of MPC common stock in an amount equal to the product of the number of shares of Andeavor common stock subject to such Andeavor award immediately prior to the Effective Time multiplied by the exchange ratio, with performance-vesting awards converted into time-vesting awards based on the greater of target and actual performance; provided, however, that certain equity awards held bynon-employee directors were converted into the right to receive the cash merger consideration.
The issuance of shares of MPC common stock in connection with the Merger Agreement was registered under the Securities Act of 1933 pursuant to MPC’s registration statement on FormS-4 (RegistrationNo. 333-225244), declared effective by the Securities and Exchange Commission (the “SEC”) on August 3, 2018 (the “Registration Statement”). The joint proxy statement/prospectus (the “Joint Proxy Statement/Prospectus”) included in the Registration Statement contains additional information about the Merger and incorporates by reference additional information about the Merger from Current Reports on Form8-K filed by MPC and Andeavor.
The foregoing description of the Merger Agreement and the Merger does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement, Amendment No. 1 and Amendment No. 2, copies of which are attached as Exhibit 2.1, 2.2 and 2.3, respectively, to this Current Report on Form8-K, each of which is incorporated herein by reference.
| Item 1.02 | Termination of a Material Definitive Agreement. |
The information set forth in Item 2.03 of this Current Report on Form 8-K is incorporated herein by reference.
| Item 2.01 | Completion of Acquisition or Disposition of Assets. |
The information set forth in the Introductory Note of this Current Report on Form 8-K is incorporated herein by reference.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under anOff-Balance Sheet Arrangement of a Registrant. |
As a result of the completion of the Merger, as of the effective time of the Second Merger, the Surviving Company assumed an aggregate principal amount of $3.375 billion in senior notes issued by Andeavor, consisting of $475 million aggregate principal amount of 5.375% Senior Notes due October 1, 2022; $850 million aggregate principal amount of 4.750% Senior Notes due December 15, 2023; $300 million aggregate principal amount of 5.125% Senior Notes due April 1, 2024 ; $750 million aggregate principal amount of 5.125% Senior Notes due December 15, 2026; $500 million aggregate principal amount of 3.800% Senior Notes due April 1, 2028; and $500 million aggregate principal amount of 4.500% Senior Notes due April 1, 2048 (collectively, the “Andeavor senior notes”).
