ConocoPhillips to Acquire Marathon Oil in a $22.5 Billion Merger
Oil company ConocoPhillips announced on Wednesday that it would be acquiring Marathon Oil in an all-stock deal worth $22.5 billion, including approximately $5.4 billion of debt. In this transaction, Marathon Oil shareholders will receive 0.255 shares of ConocoPhillips for each Marathon share they own, representing a 14.7% premium compared to Tuesday's closing price. Premarket trades revealed a 10% increase in Marathon's stock price, while ConocoPhillips' stocks saw a 2% decrease.
This move by ConocoPhillips follows ExxonMobil's $60 billion purchase of Pioneer and Chevron's agreed takeover of Hess worth $53 billion, all resulting in a wave of consolidation among oil giants. Other acquisition deals include Occidental buying CrownRock and Diamondback Energy acquiring Endeavor Energy Partners.
These profitable oil companies are making the most of their cash reserves and record profits. In addition to purchasing assets in the Permian basin, they're also focusing on boosting shareholder returns as pressure mounts to invest more in renewable energy.
ConocoPhillips' CEO, Ryan Lance, commented on the acquisition, stating in a press release, "This acquisition of Marathon Oil further deepens our portfolio and fits within our financial framework, adding high-quality, low-cost supply inventory."
The Financial Times previously reported that ConocoPhillips and Devon Energy had been competing for weeks to acquire Marathon Oil.
Marathon Oil was formerly known as The Ohio Oil Company and was founded in 1887 before being bought by John D. Rockefeller's Standard Oil in 1962. Marathon's CEO, Lee Tillman, described the acquisition as "a proud moment" and ConocoPhillips as "the right home" to continue their legacy of operational excellence and strong earnings. They are confident their assets and people will contribute significant shareholder value over the long term.
ConocoPhillips intends to achieve savings totaling $500 million within the first full year after the transaction's closing, which is scheduled for the fourth quarter of 2024 pending approval from Marathon's shareholders and regulators. The company anticipates repurchasing over $7 billion worth of shares in the first full year of the transaction and over $20 billion by the end of the third year.
(This story has been updated with additional information.)
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Business analysts are studying this merger as another strategic move in the investing landscape of the oil industry. With this acquisition, ConocoPhillips is demonstrating its commitment to expanding its investments in the sector.
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