Marathon Petroleum Corp. and Andeavor (previously Tesoro) last Wednesday announced that they have entered into a definitive merger agreement under which MPC will acquire all of Andeavor's outstanding shares, representing a total equity value of $23.3 billion and total enterprise value of $35.6 billion, based on MPC's April 27, 2018, closing price of $81.43.

This deal makes the combined company the largest crude oil refiner in the United States with a refining capacity of 2.9 million barrels per calendar day. Prior to this acquisition, Valero was the largest crude oil refiner, with Marathon second. Tesoro Corp. changed its name to Andeavor on August 1, 2017, following the completion of its acquisition of Western Refining last year. The Western Refining acquisition added 246,015 bpcd of oil refining capacity to Tesoro, raising its total oil refining capacity to 1.109 million bpcd. Andeavor operates 10 refineries in the mid-continent and western United States.

The headquarters will be located in Findlay, Ohio, and the combined business will maintain an office in San Antonio, Texas. At closing, Greg Goff, Andeavor chairman and chief executive officer, will join MPC as executive vice chairman.

The transaction was unanimously approved by the board of directors of both companies and is expected to close in the second half of 2018, subject to regulatory and other customary closing conditions, including approvals from both MPC and Andeavor shareholders.

"This transaction combines two strong, complementary companies to create a leading U.S. refining, marketing, and midstream company, building a platform that is well-positioned for long-term growth and shareholder value creation," said Gary R. Heminger, MPC chairman and chief executive officer. "Each of our operating segments are strengthened through this transaction, as it geographically diversifies our refining portfolio into attractive markets, increases access to advantaged feedstocks, enhances our midstream footprint in the Permian basin, and creates a nationwide retail and marketing portfolio that will substantially improve efficiencies and enhance our ability to serve customers."

"Importantly, we expect this transaction will be meaningfully accretive for shareholders, generating approximately $1 billion of tangible annual run-rate synergies within the first three years and significantly enhancing our long-term cash flow generation profile," said Heminger. "Given the confidence in the robust cash flow expected to be generated by the combined business, our board also authorized an incremental $5 billion of share repurchases. As a combined company, we will continue our balanced approach to investing in the business and returning cash to our investors, while maintaining our commitment to an investment-grade credit profile."

At closing, Greg Goff, Andeavor chairman and chief executive officer, will join MPC as executive vice chairman. As executive vice chairman and an executive of MPC following closing, Goff will provide leadership and be integrally involved in the strategy for the combined company. Goff, along with three other Andeavor directors, will also join the board of directors of Marathon Petroleum. "With significantly increased scale, a strong platform for our midstream businesses and a leading nationwide retail and marketing distribution portfolio, the combined company presents tremendous value enhancement and growth opportunities for all shareholders," said Goff. "This strategic combination provides our shareholders with a premium for their shares and the opportunity to benefit from substantial future value creation at MPC. As the largest refiner by capacity in the U.S., with a best-in-class operating capability and a strong capital structure, the combined company will be exceptionally well-positioned to deliver on its synergy and earnings targets. We look forward to working together to deliver on the full potential of this powerful combination."

According to the Energy Information Administration, the official energy statistics from the U.S. Government, the below lists the largest U.S. crude oil refining companies and their total refining capacities in bpcd as of January 1, 2017.

VALERO ENERGY CORP 2,180,300
MARATHON PETROLEUM CORP 1,817,000
EXXON MOBIL CORP 1,725,400
PHILLIPS 66 COMPANY 1,615,200
MOTIVA ENTERPRISES LLC 1,056,386
CHEVRON CORP 908,771
TESORO CORP 863,600* (named Andeavor as of August 1, 2017)
PBF ENERGY CO LLC 843,100
PDV AMERICA INC 758,440
BP PLC 647,000
*The Western Refining acquisition added 246,015 bpcd of oil refining capacity to Tesoro, raising its total oil refining capacity to 1.109 million bpcd, making it the fifth largest refiner.