ACON, TPG to purchase Marathon’s Minnesota downstream assets valued at $900MM

Source: ACON Investments and TPG Capital 

ACON Investments and TPG Capital announced that they have signed definitive agreements with Marathon Oil Corporation’s wholly owned subsidiary Marathon Petroleum Company LP (MPC) to acquire the majority of Marathon’s Minnesota downstream assets. TPG Capital and ACON Investments will form a new company, Northern Tier Energy LLC to operate the assets. 

ACON Investments and TPG Capital will be acquiring the 74,000 barrel/day St. Paul Park refinery and an equity interest in the Minnesota Pipe Line, the pipeline which supplies the majority of the refinery’s crude oil. In addition, ACON and TPG will be acquiring a portfolio of retail convenience ACON Investments and TPG will be equal partners in the investment. 

The total sale value of the operating assets and associated inventories is approximately $900 million; the agreements also contain earnout and margin support components subject to certain conditions. Marathon and the investor group first announced that a letter of intent had been signed on May 19, 2010. The transaction is expected to close before year-end, subject to customary closing conditions. Marathon will provide transition services after closing to support the creation of the new enterprise. 

Northern Tier Energy will operate the Minnesota assets as a stand-alone company. The senior Northern Tier management team has extensive refining industry experience with Mario E. Rodriguez serving as Northern Tier Energy’s Chief Executive Officer and Hank Kuchta serving as its Chief Operating Officer. Following the close of the transaction, Northern Tier Energy will seek to grow through continued investments in the Minnesota assets. In addition, Northern Tier Energy will look to acquire additional refining and marketing assets with similarly attractive characteristics. 

ACON and TPG’s financial advisors were Goldman Sachs, J.P. Morgan and Bank of America Merrill Lynch. ACON and TPG’s legal advisors were Cleary Gottlieb Steen & Hamilton, Vinson & Elkins LLP, Stroock, Stroock and Lavan LLP, and Faegre and Benson.

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