FOR FURTHER INFORMATION:
USX Ashland Inc.
William E. Keslar Dan Lacy
(412) 433-6870 (606) 329-3148
December 12, 1997
DEFINITIVE AGREEMENTS SIGNED FOR
MARATHON, ASHLAND JOINT VENTURE
Findlay, OH, Dec. 12 -- Thomas J. Usher, chairman of USX Corporation,
Victor G. Beghini, president of Marathon Oil, and Paul W. Chellgren,
Ashland chairman and chief executive officer, signed definitive agreements
today that will formally create Marathon Ashland Petroleum LLC. Marathon
has a 62 percent interest and Ashland a 38 percent interest in the new
company which is expected to commence operations Jan. 1, 1998.
Plans to pursue the joint venture were first announced last May 15
when a letter of intent to seek a combination of the major elements of the
two firms' downstream operations was signed. As announced on Dec. 8, the
Federal Trade Commission has advised both companies that it has completed
the antitrust review of their refining and marketing joint venture
announced earlier this year, and will permit the transaction to proceed.
Potential efficiencies to be derived by the joint venture have
been broadly estimated to be in excess of $200 million annually on a
pre-tax basis. While a modest part of these efficiencies will begin to be
achieved in mid- to late 1998, realization of efficiencies should occur
over the next few years as the joint venture's integration plans are
implemented. Certain transition costs, principally severance and
relocation, will be incurred by both parents in connection with the
formation of the new company; however, these one-time costs are not
expected to be significant, nor are any major asset dispositions
anticipated in connection with the combination at this time.
"Today's signing represents the culmination of months of
comprehensive planning and discussion and reflects the efforts of hundreds
of dedicated Marathon, USX and Ashland employees. More importantly, this
signing represents the creation of a new company, one well-
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suited to the demands of a changing market," Usher stated. "The prospect of
combining complementary assets and integrating marketing and operations
strengths through Marathon Ashland Petroleum LLC is extremely exciting. I
expect the joint venture to be a formidable competitor."
"We're very pleased that the definitive agreements have been
signed," said Chellgren. "Marathon, USX and Ashland employees are to be
commended for the hard work, dedication and aggressive pace that they've
maintained toward building one of the strongest and most competitive
downstream companies in the industry. It's our goal to close the
transaction as near to year-end as possible and integrate the operations of
the two companies as soon as possible."
J. L. "Corky" Frank, Marathon's executive vice president for
refining, marketing and transportation, will be president of the joint
venture and D. Duane Gilliam, Ashland Petroleum president, will be
executive vice president. Other officers of the joint venture from both
companies have also been announced. Headquarters for Marathon Ashland
Petroleum will be located in Findlay, Ohio.
"This signing combines the downstream resources of two outstanding
parent companies in an exciting growth-oriented venture," Frank said. "I
see the potential for significantly enhancing the value provided to
customers and other stakeholders through the joint venture's economies of
scale, feedstock purchasing, market access, and refining/transportation
flexibility. But the most important resource of all is our employees," he
emphasized. "Innovation and performance derives from people. Because of the
caliber of our people, I have no doubt that our performance will grow to be
best of class."
Marathon and Ashland have agreed that exploration, production and
chemical businesses are not to be part of the joint venture. Ashland's
refinery-produced petrochemicals will be included in the joint venture.
Other exclusions include Ashland's Valvoline division, along with certain
Marathon equity investments in pipelines.
Plans are to continue employing the existing brands that each of
the parent companies have utilized successfully. In the future, the joint
venture will develop a brand strategy that will maximize the market impact
of the brand offering. Marathon operates under the Marathon brand and
through its Emro Marketing Company brands: Speedway, Bonded, Cheker,
Starvin' Marvin,
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United, Gastown, Wake Up and Kwik Sak. Ashland brands include: Ashland,
SuperAmerica and Rich Oil.
Marathon Ashland Petroleum LLC will have approximately six percent
of total U.S. refining capacity with seven plants located at Garyville, LA,
(255,000 b/d); Catlettsburg, KY, (220,000 b/d), Robinson, IL (180,000 b/d);
St. Paul Park, MN (70,000 b/d); Texas City, TX (70,000 b/d); Detroit, MI
(70,000 b/d); and Canton, OH (70,000 b/d). The new company will have 84
light products and asphalt terminals in the Midwest and Southeast regions
of the United States, 5,400 retail marketing outlets in 20 states, and
significant pipeline holdings. On a pro forma basis, the joint venture's
combined total assets would have been roughly $7 billion at the end of 1996
and reported sales revenues for 1996 would have been approximately $20
billion, which includes approximately $7 billion of excise taxes and
matching buy/sell transactions.
Marathon Oil Company is a part of the USX-Marathon Group
(NYSE:MRO), a unit of USX Corporation. Ashland Inc. (NYSE:ASH) is a large
energy and chemical company engaged in petroleum refining and marketing;
coal and highway construction.
December 12, 1997
For more information on Marathon, see the website at www.marathon.com or
www.usx.com. For more information on Ashland, see the website at
www.ashland.com.
This press release includes forward-looking statements,
particularly concerning the amount of savings from potential efficiencies.
These statements contain the words "expected," "potential," or "estimated,"
indicating that future outcomes are not known with certainty and subject to
risk factors. Some factors that could potentially cause actual outcomes to
differ materially from information set forth in the forward-looking
statements include; unanticipated costs to implement shared technology,
difficulties in integrating corporate structures, delays in leveraging
volume procurement advantages or delays in personnel rationalization. In
addition, in accordance with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, USX has included in its Form 10-Q
for the period ended March 31, 1997, meaningful cautionary statements
identifying important factors, but not necessarily all factors, that could
cause actual results to differ materially from those set forth in the
forward-looking statements.
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