Ashland Ups the Ante on Transfer of Interest to Marathon

COVINGTON, Ky. -- Ashland Inc. has amended its agreement to transfer its 38 percent interest in Marathon Ashland Petroleum LLC (MAP) and two other businesses to Marathon Oil Corp., the company announced. Under the amended agreement, Ashland's interest in these businesses is valued at approximately $3.7 billion compared to approximately $3 billion in the earlier agreement, with substantially all the increase in value going directly to Ashland's shareholders in the form of Marathon stock.

In addition, Marathon has agreed to pay the first $200 million of any Section 355(e) tax, if any, as compared to the prior agreement where Ashland bore full responsibility for any Section 355(e) tax. The transaction is expected to be tax-free to Ashland's shareholders and tax-efficient to Ashland. The two other businesses are Ashland's maleic anhydride business and 60 Valvoline Instant Oil Change (VIOC) centers in Michigan and northwest Ohio, which are valued at $94 million.

MAP is the largest refiner in the Midwest and fifth-largest U.S. refiner with seven refineries with a total capacity of 948,000 barrels of crude oil per day. The company has more than 7,800 miles of pipeline that it owns, operates or leases and markets through a network of nearly 6,000 retail outlets under the Marathon, Speedway, SuperAmerica and Pilot Travel Center brands.

"We are pleased that our amended agreement provides an additional $700 million in value, $600 million of which will go directly to our shareholders," said James J. O'Brien, Ashland's chairman and CEO. "Ashland's board of directors took a comprehensive look at the alternatives available to Ashland with respect to our ownership interest in MAP. We concluded that this tax-efficient structure with an appropriate increase in shareholder value, as well as a significant reduction of Ashland's tax risk, was the best alternative."

O'Brien also noted that Ashland has enjoyed good working relationships with both Marathon and MAP management. "I want to thank Marathon for the successes we've shared through the MAP joint venture," said O'Brien. "We look forward to continuing our mutually beneficial business relationship as both a supplier and customer."

"The success of the MAP joint venture since its formation in 1998 is due, in large part, to the strong spirit of partnership that continues to exist between Marathon and Ashland," said Clarence P. Cazalot Jr., Marathon president and CEO. "We want to thank Ashland for being an outstanding partner and we look forward to working cooperatively with them as we move toward closing this transaction. Ashland is, and will continue to be, one of MAP's largest customers, and we also look forward to a continuing, mutually beneficial business relationship."