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MPLX LP and MarkWest Energy Partners join to create $21 billion firm

Staff writer |
MPLX LP and MarkWest Energy Partners, L.P. signed a definitive merger agreement whereby MarkWest would become a wholly owned subsidiary of MPLX.

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The merger would be a unit-for-unit transaction, generally expected to be tax-free, plus a one-time cash payment to MarkWest unitholders, that implies a total enterprise value for MarkWest of approximately $20 billion, including the assumption of debt of approximately $4.2 billion, as of the close of trading on Friday, July 10, 2015.

Under the terms of the merger agreement, which was unanimously approved by the boards of directors of the general partners of MPLX and MarkWest, the common unitholders of MarkWest would receive 1.09 MPLX common units and a one-time cash payment of approximately $3.37 per MarkWest common unit, for total consideration of $78.64 per MarkWest common unit, based on fully diluted units currently outstanding and the closing price of MPLX's units on July 10, 2015.

MPLX's sponsor, Marathon Petroleum Corporation (NYSE: MPC), would contribute $675 million of cash to MPLX to fund the one-time cash payment. In addition to the attractive premium of 32 percent based on the July 10, 2015, closing price of $59.75, MarkWest unitholders would participate in the combined partnership's projected peer-leading distribution growth.

The proposed transaction combines the nation's second-largest processor of natural gas and largest processor and fractionator in the Marcellus and Utica shale plays with a rapidly growing crude oil and refined products logistics partnership sponsored by MPC.

The combination would create the fourth-largest master limited partnership (MLP) based on a market capitalization of $21 billion.

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