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
Related articles
- Murphy Oil announces stock redistribution, appointment of new officials (arkansasonline.com)
- Murphy Oil Corporation Approves Spin-Off of Murphy USA Inc. and Announces Regular Dividend (dailyfinance.com)
Form 10 and Presentation on MURPHY OIL website indicate MURPHY USA owns 90% of their REAL ESTATE. Impressive!