By LOU WILIN
Marathon Petroleum’s $2.87 billion purchase of Hess Corp.’s retail business in September could soon make it Ohio’s largest company by sales.
It already ranked second in 2013 with $100.25 billion in sales behind pharmaceutical and medical supply company Cardinal Health, of Dublin, which had $101.09 billion in sales. Kroger Co. was third, with $98.38 billion.
Marathon Petroleum’s Speedway subsidiary is expected to double its $14.5 billion in 2013 sales when it adds the 1,256 Hess stores in 16 East Coast and Southeastern states, said Fadel Gheit, senior energy analyst for Oppenheimer. Meanwhile, Cardinal Health’s sales are forecast to decline this year after it lost a $22 billion-a-year contract with Walgreen Co., the Journal-News of Hamilton reported.
In 2012, Marathon Petroleum’s sales of $82.49 billion were $25.32 billion less than Cardinal Health’s. Marathon Petroleum’s sales jumped in 2013 mainly due to its purchase of a Galveston Bay refinery in Texas from British Petroleum. Galveston Bay is Marathon Petroleum’s second-largest refinery.
With the purchase of the Hess stores, Speedway will become the nation’s largest company-owned convenience store chain by revenue, said Tony Kenney, Speedway president. It now is the fourth-largest, dominating the Midwest. Hess, dominant on the East Coast and Southeast, is fifth-largest.
The addition of the stores assures Marathon of more sales of its refined products, since it expanded its refining capacity with the Galveston Bay purchase. The Hess stores will be an important outlet for gasoline produced at Marathon’s seven refineries as the export market for gasoline and diesel becomes increasingly competitive, Platts Commodity News reported.
“I certainly think securing outlets for petroleum products played an important and probably most important part in the deal,” John Auers, senior vice president at Turner, Mason & Co., told Platts Commodity News. “Exporting products will become more and more competitive and the more product you can place domestically, the better.”
Securing sales of its gasoline production will be important. While U.S. gasoline demand is expected to rise this year, the supply is expected to exceed it, Platts Commodity News reported.
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