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ConocoPhillips to acquire Marathon Oil for US$22.5 billion
All-stock deal is immediately accretive to earnings, cash flows and distributions per share
Michael Marray 5 Jun 2024

ConocoPhillips has agreed to acquire Marathon Oil Corporation in an all-stock transaction with an enterprise value of US$22.5 billion, including US$5.4 billion of net debt.

Under the terms of the agreement, Marathon Oil shareholders will receive 0.2550 shares of ConocoPhillips common stock for each Marathon Oil common stock, representing a 14.7% premium to the closing share price of Marathon Oil on May 28, and a 16% premium to the prior 10-day volume-weighted average price.

The acquisition is immediately accretive to ConocoPhillips on earnings, cash from operations, free cash flow, and return of capital per share to shareholders, the company says.

Given the adjacent nature of the acquired assets and a common operating philosophy, ConocoPhillips expects to achieve the full US$500 million of cost and capital synergy run rate within the first full year following the closing of the transaction. The identified savings will come from reduced general and administrative costs, lower operating costs, and improved capital efficiencies.

The deal is subject to the approval of Marathon Oil stockholders, regulatory clearance and other customary closing conditions. It is expected to close in the fourth quarter of 2024.

Independent of the transaction, ConocoPhillips expects to increase its ordinary base dividend by 34% to 78 US cents per share starting in the fourth quarter of 2024.

Upon closing of the transaction, the company expects share buybacks to be over US$20 billion in the first three years, with over US$7 billion in the first full year.

Both companies are headquartered in Houston, Texas, and listed on the New York Stock Exchange.

Evercore is ConocoPhillips’ financial adviser in the deal, with Wachtell, Lipton, Rosen & Katz serving as legal adviser. Morgan Stanley is Marathon Oil’s financial adviser, with Kirkland & Ellis as legal adviser.

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