Marathon decides against proposed Speedway spin-off

Marathon’s board of directors announced this morning the company will not move forward with a proposed spin-off of the Speedway convenience store chain, which is based in Enon.

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Marathon’s board of directors announced this morning the company will not move forward with a proposed spin-off of the Speedway convenience store chain, which is based in Enon.

Marathon’s board’s has decided to keep the Enon-based Speedway convenience store chain and not spin it off as a separate business, a move experts said is likely driven by the success of convenience stores.

Marathon, based in Findlay, had been reviewing a proposal that would have spun off the Speedway chain as a separate entity after a recommendation from one of the company's largest shareholders. Speedway's corporate headquarters is based in Enon, and the company is one of Clark County's largest employers with about 1,350 workers locally and about 33,820 nationally.

READ MORE: Enon-based Speedway hits near record earnings of $239M

Instead the parent company’s board announced this morning the convenience store chain is more valuable to shareholders if it remains under Marathon’s umbrella.

“Following a rigorous review led by an independent committee of the board, the board has unanimously concluded that shareholder value is best optimized with Speedway remaining part of our integrated business,” said Gary Heminger, Marathon’s president and CEO in a press release announcing the decision. “We thank the independent committee for its efforts in performing a comprehensive review of options to ensure we are best positioned to deliver the greatest possible long-term value for our shareholders.”

RELATED: Marathon review of Enon-based Speedway could include spin-off

In-store sales at convenience stores has gone up in the past couple of years, said Jeff Lenard who’s an analyst and vice president of Strategic Industry Initiatives. The company works to help investors pick the best companies to invest in.

Convenience store sales reached $233 billion in the industry nationwide in 2016, which resulted in in more than $10 billion pre-tax profits, he said.

“Anyone that competes against the internet is having trouble,” Lenard said. “If you can wait a day or two for the product then that business model is endangered. However, the convenience store model is about right now. You are hungry now, you need this product or that product now.”

In 2014, Speedway completed a $2.8 billion acquisition of Hess Retail Holdings, an East Coast convenience store chain. Speedway already operated about 1,500 stores across the U.S., mostly in Midwestern states like Ohio, Indiana and Michigan.

DETAILS: Marathon reports earnings up in first quarter

The Hess acquisition can benefit Speedway into the future, Lenard said. There’s value in having convenient stores even in the internet age.

“People in the industry see the value in brick and mortar stores,” he said. “Having a substantial brick and mortar network of stores can be a real plus.”

He said location also plays a big role in convenience stores’ success. Stores that are able to attract thousands of customers a week — as many Speedway stores do throughout the country — are likely to succeed, he said.

The acquisition allowed the business to take control of 1,260 Hess locations, making Speedway one of the largest convenience store chains in the country.

Speedway representatives didn’t immediately respond to interview requests from the Springfield News-Sun.

The Chamber of Greater Springfield has paid attention to the Marathon and Speedway talks over the past year. Horton Hobbes, vice president of economic development for the chamber, said that’s because Speedway is a top employer in Clark County.

“Having a corporate headquarters in our community is critically important and to the community as a whole,” Hobbes said. “I think it would be important to note that they are a philanthropic entity that supports a lot of different things here.”

By the numbers:

$233 billion: In-store sales in all U.S. convenience stores in 2016.

1,350: Local employees of Speedway in Clark County.

33,820: Employees of Speedway nationally.

Staying with the story

The Springfield News-Sun provides unmatched coverage of Speedway, one of the biggest local employers, including stories digging into what a proposed spin-off of the corporation could mean and how its purchase of the Hess chain could impact jobs here.

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