MAP Breakup Back on Track


The Marathon Ashland Petroleum base oil plant in Catlettsburg, Ky., seems likely to become the sole property of Marathon Oil Corp., now that MAPs owners have amended a deal to break up the partnership.

Ashland Inc. and Marathon announced Thursday that they have adjusted terms on their year-old agreement for Marathon to buy Ashlands 38 percent stake in MAP. The companies amended the agreement in hopes of shaking loose a deal that has been grounded for months for failure to receive favorable tax treatment from the Internal Revenue Service.

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Ashland said the new deal is good for its shareholders because they will receive an additional $600 million compensation and because Marathon agreed to pay the first $200,000 of any tax liability.

Ashlands Board of Directors took a comprehensive look at the alternatives available to Ashland with respect to our ownership interest in MAP, Ashland Chairman and Chief Executive Officer James J. OBrien said. We concluded that this tax efficient structure with an appropriate increase in shareholder value, as well as a significant reduction of Ashlands tax risk, was the best alternative.

The amended agreement still has a few hurdles to clear, including approval by Ashlands shareholders, consent from public debt holders, finalization of the closing agreement with the Internal Revenue Service and customary antitrust review. The companies said they now hope to complete the transaction by June 30.

If and when that happens, Marathon will become sole owner of the Catlettsburg base oil plant, which has capacity to make 6,700 barrels per day of Group I stocks. Marathon would also obtain 60 Valvoline Instant Oil Change centers in Michigan and Ohio and Ashlands maleic anhydride business.

The amended terms of the sale include a price tag of $3.7 billion – up from $3 billion originally. In addition, Marathon agreed to pay up the first $200 million in Section 355(e) taxes. Ashland would pay the next $175 million.

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