Murphy Oil USA Deal With Walmart Bodes Well For Upcoming Spin From Murphy Oil

Spinoffs take awhile to execute and the world doesn’t just pause for these companies. Murphy Oil USA, the downstream arm of Murphy Oil (MUR) set to be spun out next year, announced that it entered into an agreement with Wal-Mart (WMT) to open up over 200 new locations at existing Walmart stores. The program is expected to be completed over the next three years and will mainly be located in the Midwest and the Southeast.

The move represents some nice growth for the retail arm and a strategy for its future. Getting in with Wal-Mart is often a huge competitive advantage given the high amount of traffic and solidifying this relationship will greatly benefit the company as it prepares to branch off on its own. The truth is this partnership really fits perfectly with its high volume/low margin approach. This Seeking Alpha piece seems to agree and believes that both the parent and the spin could be attractive in this case.

For our earlier coverage on the spin check out our pieces here and here.

Disclosure: Author holds no position in any stock mentioned.