In July, MPLX LP (NYSE: MPLX) and MarkWest Energy Partners LP (NYSE: MWE) signed a definitive merger agreement whereby MarkWest would become a wholly owned subsidiary of MPLX. If closed, the deal would create the fourth-largest master limited partnership (MLP) based on a market capitalization of $21 billion.
On Nov. 4, John M. Fox, the co-founder of MarkWest Hydrocarbon, former CEO, chairman and director of MarkWest Energy GP LLC, the general partner of MarkWest Energy Partner LP, and beneficial owner of 1,361,774 MarkWest common units, detailed in an open letter to the board of directors of MarkWest GP his opposition to the proposed merger.
In the letter, Fox states his intent to vote against the merger, pointing to a "significant reduction in distributions," and post-merger Incentive Distribution Right obligations that would "take money from unitholders and limit future growth," as reasons why MarkWest is "much better off as a standalone company."
The transaction between MPLX and MarkWest was unanimously approved by the boards of directors of the general partners of MPLX and MarkWest, but still subject to approval by MarkWest unitholders and to customary closing conditions and regulatory approvals.
The full text of the letter can be found here.