Marathon Petroleum Corp (MPC.N) announced a series of steps to increase its stock price, including the possible separation of its Speedway retail business, amid pressure from hedge fund Elliott Management.
Shares of Marathon jumped 6 percent to $53.17 on the announcement, which included accelerating its drop down of assets into its master limited partnership, MPLX LP (MPLX.N), and that it may receive new common units in the partnership.
In addition, the Findlay, Ohio-based refiner will form a special board committee to consider a spin-off or other alternatives for Speedway, a move Elliott had pressed in its initial letter to the company back in November.
Elliott unveiled a 4-percent stake in Marathon that month and issued a set of demands, including the acceleration of Marathon's previously announced drop down. Elliott also urged the company to consider separating all three of its retail, refining and pipeline businesses.
Marathon at the time signaled a disagreement with Elliott's plan, but has since showed that it is willing to work with the activist hedge fund.
Last month, Marathon extended its board director nomination deadline to Jan. 9, in a sign that Elliott and the company were discussing ways to reach a compromise before the hedge fund could nominate directors of its own.
"We appreciate the open and candid dialogue we have had with the management team," Elliott Portfolio Manager Quentin Koffey said in a statement on Tuesday.
Marathon Petroleum said on Tuesday that it expects to provide an update of its review of Speedway, a chain of gasoline pumps and convenience stores, by mid-2017.
(Additional reporting by Arathy S Nair in Bengaluru; Editing by Shounak Dasgupta and Nick Zieminski)