(Adds Evercore role, nomination deadline, analyst note)
By Michael Flaherty
Nov 21 Elliott Management unveiled it has a 4
percent stake in Marathon Petroleum Corp on Monday,
urging the company in a letter to launch a strategic review and
consider spinning off its three main businesses.
Marathon responded by saying it disagreed with the letter to
its board and was moving ahead with its own plan, a reply that
signaled rising tension between the refiner and the activist
Marathon has hired boutique investment bank Evercore
Partners to advise on its engagement with Elliott, people
familiar with the matter said. Marathon and Evercore did not
immediately return calls seeking comment on the defense plan.
The deadline for Marathon shareholders to nominate directors
is Dec. 15, meaning Elliott could seek board seats if talks
between the two sides fail to improve.
Elliott, which joins fellow activist Jana Partners as a
Marathon shareholder, also said the company needs to speed up
its so-called "drop down" plan related to its master limited
partnership, MPLX Inc..
Findlay, Ohio-based Marathon last month said it would seek
to place some of its assets into MPLX, a move Jana said it
Elliott, however, said the company should proceed with the
drop down immediately and better communicate what is being put
"We believe the recent strategic announcement exacerbated
the uncertainty surrounding MPLX," Quentin Koffey, a portfolio
manager at Elliott, said in the letter.
Marathon should consider spinning off just Speedway, its
retail chain of gasoline and convenience stores, or all three of
its retail, refining and pipeline businesses.
Marathon shares were up 5 percent at $45.70 on Monday while
MPLX's stock was up 3 percent to $33.98.
"We agree with Elliott Management that there is upside to
our valuation, which we are addressing with the value-creating
actions we announced last month, but we disagree with their
letter and presentation," Marathon CEO Gary Heminger said on
Elliott's stake makes it Marathon's fourth largest
Cowen & Co said in a research note that a retail spin-off
was less likely than speeding up the drop down plan.
Jana's managing partner, Barry Rosenstein, said in October
he supported the shift of assets to MPLX and the possible
changes to Marathon's financial reporting that would result.
Jana, which raised its stake in the company to 0.8
percent last quarter, has been a Marathon investor dating back
to 2012, when it pushed the company to spin-off MPLX.
(Additional reporting by Arathy S Nair in Bengaluru; Editing by
David Gregorio and Alan Crosby)