by Lance Turner
Posted 8/7/2013 03:19 pm
Updated 11 months ago
Murphy Oil Corp. of El Dorado said Wednesday that its board of directors has approved the planned spinoff of its gas station unit into a separate publicly traded company, Murphy USA Inc., which will take place on Aug. 30 after market close.
The spinoff, which has been in the works since late 2011, will take place by way of a stock distribution to Murphy Oil shareholders. The company said those shareholders will receive one share of Murphy USA Inc. common stock for every four shares of Murphy Oil common stock held at the close of business on Aug. 21.
Shares of Murphy Oil (NYSE: MUR) closed down 1 percent at $69.67 on Wednesday.
"Following the distribution of MUSA common stock on Aug. 30, MUSA will be an independent, publicly traded company," Murphy Oil said in a news release. "MUSA has received approval for the listing of its common stock on the New York Stock Exchange under the symbol 'MUSA.'"
Murphy said investors will be able to trade MUSA stock beginning on Sept. 3, although some trading will begin on the "when-issued" market beginning Aug. 19.
Once the spinoff is complete, the new company will be "a retail marketer of fuel products and convenience merchandise operating a network of 1,179 retail fuel stations" in 23 states. Most of the stations are in close proximity to stores operated by Wal-Mart Stores Inc. of Bentonville.
As previously announced, R. Andrew Clyde will be the new company's president and CEO. In addition to the gas stations, the company will have seven product distribution terminals and two ethanol production facilities in North Dakota and Texas.
Meanwhile, Murphy Oil Corp. of El Dorado will be "an independent exploration and production company with a strong portfolio of global offshore and onshore assets delivering oil-weighted growth with upside to our exploration program," the company said. Murphy Oil Corp. operates in the U.S., Canada and Malaysia.
"Today's announcement signals an exciting new beginning for both Murphy Oil Corp. and Murphy USA Inc., as separating these two businesses will allow each to unlock its own potential for growth," Steve Cossé, Murphy Oil Corp.'s president and CEO, said in a news release.
The company said it will mail an information statement to shareholders entitled to receive MUSA shares before Aug. 30. The information statement will describe MUSA, the risks of owning MUSA common stock, and other spinoff details.
A regular dividend of 31.25 cents per share, or $1.25 per share on an annualized basis, will be payable on Aug. 30 to Murphy Oil shareholders of record as of the close of business on Aug. 21.
The spinoff means a new publicly traded company in El Dorado, which is also home to a previous Murphy Oil spinoff, Deltic Timber Inc.
The move also means a new president and CEO for Murphy Oil Corp. On Aug. 30, Roger Jenkins will take over chief executive of the company. Cossé has been president and CEO of Murphy Oil Corp. since June 2012, following the sudden departure of former CEO David Wood. Murphy Oil announced in May that Jenkins would take over as CEO once the spinoff of the gas station operation was complete.
"We owe a debt of gratitude to Steve for his leadership over the last year as we transitioned both our upstream and downstream businesses," Claiborne Deming, chairman of Murphy Oil board and a former company CEO, said in a news release. "The Board looks forward to working with Roger as he leads us into a new phase as an independent exploration and production company."
After the Spinoff
"Separating these two businesses will allow each to unlock its own potential for growth. We have built two strong but distinct businesses," Deming said when the company officially announced plans for the spinoff in October.
"Murphy will be a pure-play exploration and production company with strong returns and attractive investment opportunities, while Murphy USA will be a leading retailer with over 1,100 retail gasoline outlets. Given its existing positioning in the market, I am confident that Murphy USA will continue to grow the business and drive shareholder value."
Former CEO David Wood discussed the possible spinoff throughout early 2011, but resigned before any action was taken. At least one hedge fund, Third Point LLC of New York, had been pressuring the company to spin off its retail gas station unit.
Also Wednesday, Murphy Oil announced the election of T. Jay Collins to its board of directors. Collins is a director on the board of Oceaneering International Inc., a global oilfield provider of engineered services and products primarily to the offshore oil and gas industry. Collins retired as president and CEO of that company in May 2011.
J.P. Morgan Securities LLC and Stephens Inc. of Little Rock acted as financial advisors to Murphy Oil on the spinoff. Davis Polk & Wardwell LLP acted as legal advisor.