What happened

Shares of Marathon Petroleum (MPC 1.07%) slumped more than 10% by 3 p.m. EST on Thursday. Driving down the refining stock was a report that the potential buyer of its Speedway gas station business had ended negotiations.  

So what

On Feb. 20, several media outlets reported that Japanese retail group Seven & i Holdings, which runs the 7-Eleven convenience store chain, was in exclusive talks to buy Marathon Petroleum's Speedway business. The deal would have valued Speedway at $22 billion. 

A picture of two people shaking hands that's torn in half.

Image source: Getty Images.

That proposed transaction, however, has now reportedly fallen apart. Among the factors causing the termination was the COVID-19 coronavirus outbreak, which has started denting demand for the refined petroleum products sold at gas stations. On top of those demand concerns, analysts and investors thought the $22 billion price tag seemed steep, with credit rating agency S&P Global saying the deal would be a credit negative for the company

Now what

Marathon Petroleum had been planning to spin off its Speedway business before it entered exclusive negotiations with Seven & i. It's still on target with that strategy, aiming to complete the separation by the fourth quarter of this year, unless another interested bidder shows up. The company has been under pressure from activist investors to separate itself from not only Speedway but also its midstream business, which includes its stake in MLP MPLX (MPLX 1.32%). With a sale of Speedway now unlikely, analysts think Marathon will turn its attention to maximizing the value of MPLX and its midstream assets.