- A big bet on refining. CVR Energy, the oil refiner controlled by Carl Icahn, is near a deal worth more than $4 billion to buy refineries from Marathon Petroleum, according to people familiar with the matter cited by The Wall Street Journal. The deal is set to be announced Tuesday morning, assuming talks don’t fall apart.
- The buyer is much smaller than the seller. CVR has a market value close to $6 billion, while Marathon’s is about $125 billion, the WSJ reported. CVR’s stock is up roughly 120% this year through Monday.
- Icahn controls the company. He owns roughly 71% of CVR’s shares, and his son, Brett Icahn, sits on its board. CVR is currently the seventh-biggest publicly traded US refiner, behind giants including Marathon, Valero Energy and Phillips 66.
- The sector is consolidating. Last week, Valero agreed to buy a closed Houston refinery once owned by LyondellBasell for $320 million, with plans to restart it at 165,000 barrels a day of capacity by the end of 2027, the WSJ reported.
What Happened?
CVR’s plants in Kansas and Oklahoma have been earning strong profits as the Russia-Ukraine war and conflicts in the Middle East have taken a large share of the world’s fuel-making capacity offline. Companies of all sizes have been hunting for refineries to build bigger fuel businesses, and ExxonMobil and Chevron are investing more in the sector and squeezing more fuel out of their existing Gulf Coast plants, according to the WSJ.
Why It Matters?
A deal of more than $4 billion would be a major expansion for CVR, which has a market value of about $6 billion, and would show how much buyers are willing to pay to lock in exposure to wide refining margins for diesel, gasoline and jet fuel. For Marathon, selling plants would let it raise cash at a time when refining assets command strong prices.
What’s Next?
Watch for the official announcement on Tuesday, including which refineries are involved, the final price and how CVR plans to pay for the deal. Investors will also look at how CVR and Marathon shares react, and whether more refinery sales follow while global capacity remains tight.
Affected Tickers and Coins: CVI, MPC, VLO, PSX
Source: WSJ
