Elliott renews call to split Marathon Petroleum

(Reuters) – Elliott Management Corp on Wednesday renewed its demand for Marathon Petroleum Corp (MPC.N) to split into three companies, saying such a move would boost shareholder value by as much as $40 billion.

Shares of the company, which had a market capitalization of $36.52 billion, rose 5% in early trading to $58.26.

Elliott said the renewed call, first made in 2016, to split Marathon’s retail, refining and midstream assets was prompted by the company’s failure to deliver on past promises.

Under Elliott’s latest plan, Marathon’s transportation and storage business will become MPLX, a standalone company with an enterprise value of more than $50 billion. Its refining business will become “New Marathon” with an enterprise value of $29 billion, while its retail business will become Speedway worth about $18 billion.

The latest push from the activist investor comes just months after Marathon completed the merger of its midstream unit MPLX (MPLX.N) and Andeavor Logistics LP ANDX.N in a $9 billion deal.

The hedge fund said on Wednesday it had accepted a “compromise” last time around after “extensive” talks in which Marathon agreed to simplify its midstream business and undertake a strategic review of its Speedway assets.

Elliott said it estimated $22 billion boost to shareholder value from the split and another $17 billion if refining, retailing and marketing operations were to be improved after the separation.

Marathon did not immediately respond to a request for comment.

Top 20 shareholder DE Shaw has backed the split of Marathon, CNBC reported, citing sources.

The activist investor holds about 0.9% stake in the company, according to Refinitiv Eikon data as of June 30. DE Shaw declined to comment.

Marathon Petroleum’s shares have fallen 6% this year, compared with a 7.4% gain in the S&P oil and gas refining and marketing index.