Stock Spinoffs

Murphy USA Spinoff Approved And Set For End Of August

Spin Doctor
Murphy Oil’s (MUR) board of directors formally approved the spinoff of its US retail marketing business, Murphy USA Inc, recently. The distribution is expected to be tax free and is set for August 30th to shareholders of record on August 21st. The new company will trade on the NYSE under the ticker ‘MUSA’ and MUR shareholders will receive one share of MUSA for every 4 shares of MUR owned. A when issued market is expected ‘on or about’ August 19th with regular way trading beginning on September 3rd which is the first post-distribution trading day.

While HQ will remain in Arkansas, the new company has a fresh CEO, R. Andrew Clyde, plucked from the consulting world and a strong market position due to its tie up with Wal-Mart (WMT). In addition to operating convenience stores selling merchandise and fuel, the company will also own several midstream and ethanol assets. Since the ethanol business does not support the retail business, the company is already considering its strategic alternatives. Sounds like a nice ‘gift’ from the parent company.

Murphy USA will also incur a bunch of new debt in order to finance a $650m dividend payment to Murphy Oil. Similar to other retail businesses, it’s worth looking into the amount of leased vs. owned properties when analyzing its capital structure. I haven’t had a chance to fully dig into the Form 10 to do perform analysis, but it could have a dramatic impact.

With both pure play peers – ex. CST Brands (CST) or Susser Holdings (SUSS) – and retail segments within larger companies – ex Tesoro (TSO) or Delek USA (DK) – it should be possible to come up with a relative valuation peer set for the business. For more information, check out the latest Form 10 and all of our earlier coverage here.

Disclosure: Author is long shares of CST

 

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