The Scoop
Phillips 66 and Marathon Petroleum held merger talks earlier this year in a deal that would have created a $180 billion oil-and-gas giant, according to people familiar with the matter.
The talks ultimately fizzled out and are unlikely to be resurrected anytime soon, the people said. Spokespeople for Phillips and Marathon declined to comment.
That the talks took place at all, though, is a sign of the exuberance fueling M&A under the Trump administration. A combination of the two businesses — which together account for roughly a quarter of the US’ refining capacity — would have faced antitrust scrutiny given there are only a handful of standalone refiners in the US.
But administration officials have waved through a number of big mergers in other industries, including a $110 billion deal for Warner Bros. Discovery and a $14 billion deal for Juniper Networks. Stanley Woodward, a top Justice Department official, has pushed to avoid trials in favor of settlements.
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A combined company would be able to maintain a higher profit margin even when fuel prices dip, in part by negotiating stronger discounts from crude traders. The two companies have a number of complementary businesses — including substantial pipeline and storage networks — but combining the operations would have been thorny.
Phillips 66 has a chemicals joint venture with Chevron that each side has a right of first refusal to acquire wholly; previous efforts to sell the business from both Chevron and Phillips’ end have run into hurdles, other people said. Marathon also has a publicly traded but controlled subsidiary, MPLX, that would have added additional complexity to any combination.