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ConocoPhillips to acquire Marathon Oil Corporation in all-stock transaction

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ConocoPhillips and Marathon Oil Corporation have announced a definitive agreement where ConocoPhillips will acquire Marathon Oil in an all-stock transaction valued at $22.5 billion, including net debt of $5.4 billion. Under the terms of the agreement, Marathon Oil shareholders will receive 0.2550 shares of ConocoPhillips common stock for each share of Marathon Oil common stock, representing a 14.7 percent premium to the closing share price of Marathon Oil on May 28, 2024.

Ryan Lance, chairman and CEO of ConocoPhillips, stated that the acquisition of Marathon Oil deepens their portfolio and aligns with their financial framework. He emphasised the shared values and culture of both companies, focusing on safety and responsible operations to create long-term shareholder value. The transaction is immediately accretive to earnings, cash flows, and distributions per share, with significant synergy potential.

Lee Tillman, chairman, president, and CEO of Marathon Oil, expressed pride in the achievements of Marathon Oil and stated that ConocoPhillips is the right home to build on that legacy. He highlighted the unique combination of scale, resilience, and long-term durability that ConocoPhillips offers, with a premier global asset base and a focus on operational excellence.

The transaction is expected to deliver several benefits, including immediate accretion to ConocoPhillips, significant cost and capital synergies, and enhancement of ConocoPhillips’ premier Lower 48 portfolio. The cost and capital synergy run rate of $500 million is expected to be achieved within the first full year following the closing of the transaction.

ConocoPhillips also plans to increase its ordinary base dividend by 34 percent to 78 cents per share starting in the fourth quarter of 2024. Additionally, the company intends to prioritise share repurchases, with plans to retire the equivalent amount of newly issued equity in the transaction in two to three years.

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

Advisors for the transaction include Evercore as ConocoPhillips’ financial advisor and Wachtell, Lipton, Rosen & Katz as ConocoPhillips’ legal advisor. Morgan Stanley & Co. LLC is serving as Marathon Oil’s financial advisor, and Kirkland & Ellis LLP is serving as Marathon Oil’s legal advisor.

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