424B3 1 d745690d424b3.htm 424B3 424B3
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Filed pursuant to Rule 424(b)(3)
Registration No. 333-231798

 

 

 

LOGO

Dear ANDX Common and Series A Preferred Unitholders:

Pursuant to an Agreement and Plan of Merger, dated as of May 7, 2019 (the “Merger Agreement”), the general partner of Andeavor Logistics LP (“ANDX”), which is Tesoro Logistics GP, LLC (“ANDX GP”), and the general partner of MPLX LP (“MPLX”), which is MPLX GP LLC (“MPLX GP”), on behalf of each of ANDX and MPLX, have approved the combination of the businesses of ANDX and MPLX. Pursuant to the Merger Agreement, MPLX MAX LLC, a direct, wholly owned subsidiary of MPLX (“Merger Sub”), will merge with and into ANDX, with ANDX being the surviving entity and becoming a wholly owned subsidiary of MPLX (the “Merger”). Both ANDX GP and MPLX GP are indirect, wholly owned subsidiaries of Marathon Petroleum Corporation (“MPC”), and as a result, MPC controls both ANDX and MPLX.

As a result of the Merger, (a) each common unit representing a limited partner interest in ANDX (each, an “ANDX Common Unit” and, collectively, the “ANDX Common Units”), other than any ANDX Common Units held by ANDX GP and Western Refining Southwest, Inc. (“ANDX Refining Southwest”) (such ANDX Common Units, the “Public Unitholder Eligible Units”), issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive 1.135 common units representing limited partner interests in MPLX (“MPLX Common Units”) (such exchange ratio, the “Public Unitholder Exchange Ratio”); (b) each ANDX Common Unit held by ANDX GP and ANDX Refining Southwest issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive 1.0328 MPLX Common Units (such exchange ratio, the “Affiliated Unitholder Exchange Ratio”); (c) each 6.875% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Unit, liquidation preference $1,000 per unit, representing a limited partner interest in ANDX (each, an “ANDX Series A Preferred Unit” and, collectively, the “ANDX Series A Preferred Units”) issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive a Series B Preferred Unit representing a substantially equivalent limited partner interest in MPLX (each, an “MPLX Series B Preferred Unit” and, collectively, the “MPLX Series B Preferred Units”); (d) each TexNew Mex Unit, as such term is defined in the Third Amended and Restated Agreement of Limited Partnership of ANDX, as amended (the “ANDX Partnership Agreement”), issued and outstanding immediately prior to the effective time of the Merger will be converted into a new class of units of MPLX with substantially equivalent rights, powers, duties and obligations as the TexNew Mex Units; and (e) the interest in ANDX that confers upon the holder thereof only the rights and obligations specifically provided in the ANDX Partnership Agreement with respect to the “Special Limited Partner Interest” (the “ANDX Special Limited Partner Interest”) will be converted into a new limited partner interest in MPLX with substantially equivalent rights, powers, duties and obligations as the ANDX Special Limited Partner Interest.

Additionally, at the effective time of the Merger, each phantom unit issued under ANDX’s 2011 Long-Term Incentive Plan, as amended and restated, and the Western Refining Logistics, LP 2013 Long-Term Incentive Plan (each, an “ANDX Phantom Unit” and, collectively, the “ANDX Phantom Units”), whether vested or unvested, other than any ANDX Phantom Unit that is held by a non-employee director of ANDX GP (each, an “ANDX Director Phantom Unit” and, collectively, the “ANDX Director Phantom Units”), will automatically be converted into a phantom unit denominated in MPLX Common Units (the “Converted MPLX Phantom Units”). The number of ANDX Common Units subject to the ANDX Phantom Units immediately prior to the effective time of the Merger will be converted into a number of MPLX Common Units subject to the Converted MPLX Phantom Units based on the Public Unitholder Exchange Ratio (rounded down to the nearest whole number). ANDX Director Phantom Units will generally be converted into the right to receive a cash payment equal to the number of ANDX Common Units subject to such ANDX Director Phantom Unit multiplied by the product of the Public Unitholder Exchange Ratio and the average of the volume weighted average price per unit of MPLX Common Units on the New York Stock Exchange (the “NYSE”) on each of the ten consecutive trading days ending with the complete trading day immediately prior to the closing of the Merger.


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ANDX Common Units currently trade on the NYSE under the symbol “ANDX,” and MPLX Common Units currently trade on the NYSE under the symbol “MPLX.”

The conflicts committee (the “ANDX Conflicts Committee”) of the board of directors of ANDX GP (the “ANDX Board”) unanimously determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are in, or not opposed to, the best interests of ANDX and its subsidiaries treated as a single consolidated entity and the holders of Public Unitholder Eligible Units, approved and declared advisable the Merger and the consummation of the transactions contemplated by the Merger Agreement (the foregoing constituting “Special Approval” under the ANDX Partnership Agreement), and recommended that the ANDX Board approve the Merger Agreement, the other transaction documents contemplated by the Merger Agreement (collectively, the “Transaction Documents”), and the consummation of the transactions contemplated thereby, including the Merger. Based on the approval and recommendation of the ANDX Conflicts Committee, the ANDX Board unanimously determined that the Merger Agreement, the other Transaction Documents and the transactions contemplated thereby, including the Merger, are in, or not opposed to, the best interests of ANDX and its subsidiaries treated as a single consolidated entity, approved and declared advisable the Merger Agreement, the other Transaction Documents to which ANDX and ANDX GP are a party and the transactions contemplated thereby, including the Merger, recommended approval of the Merger Agreement and the Merger by the holders of ANDX Common Units and directed that the Merger Agreement be submitted to the holders of ANDX Common Units for their adoption by written consent.

The approval and adoption of the Merger Agreement and the Merger by ANDX require the affirmative vote or consent of (i) holders of at least a majority of the outstanding ANDX Common Units and (ii) ANDX GP and ANDX Refining Southwest, as holders of ANDX Common Units subject to the lower Affiliated Unitholder Exchange Ratio. Pursuant to the terms of a Support Agreement, dated as of May 7, 2019, by and among ANDX, ANDX GP, ANDX Refining Southwest, MPC and MPLX (the “Support Agreement”), ANDX GP and ANDX Refining Southwest, which, as of May 7, 2019, together beneficially owned 156,173,128 ANDX Common Units representing approximately 64% of the outstanding ANDX Common Units, agreed to deliver a written consent approving the Merger, the Merger Agreement and the transactions contemplated thereby (the “ANDX Written Consent”) within two business days after the effectiveness of the registration statement of which this consent statement/prospectus forms a part. The delivery of the ANDX Written Consent by ANDX GP and ANDX Refining Southwest with respect to the ANDX Common Units they own will be sufficient to adopt the Merger Agreement and thereby approve the Merger, without the receipt of written consent from any other holder of ANDX Common Units.

The ANDX Board has set June 28, 2019 as the record date (the “Record Date”) for determining the holders of ANDX Common Units entitled to execute and deliver written consents with respect to this consent statement/prospectus. If you are a record holder of outstanding ANDX Common Units as of the Record Date, you may complete, date and sign the enclosed written consent and promptly return it to ANDX. See the section entitled “Written Consents of Holders of ANDX Common Units” beginning on page 39 of this consent statement/prospectus.

This consent statement/prospectus provides you with detailed information about the proposed Merger and related matters. This represents a consent statement of ANDX in connection with the approval of the matters set forth herein, and a prospectus of MPLX in connection with the offering of the MPLX Common Units and MPLX Series B Preferred Units issuable in connection with the Merger. ANDX and MPLX encourage you to read the entire document carefully. In particular, please read the section entitled “Risk Factors” beginning on page 28 of this consent statement/prospectus for a discussion of risks relevant to the Merger and the combined partnership.

Sincerely,

 

LOGO

Gary R. Heminger

Chairman of the Board and Chief Executive Officer

Tesoro Logistics GP, LLC, as the general partner

of Andeavor Logistics LP

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THE MERGER, THE ADOPTION OF THE MERGER AGREEMENT, THE ISSUANCE OF MPLX COMMON UNITS OR MPLX SERIES B PREFERRED UNITS IN CONNECTION WITH THE MERGER OR ANY OTHER TRANSACTIONS DESCRIBED IN THE ACCOMPANYING CONSENT STATEMENT/PROSPECTUS, OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

This consent statement/prospectus is dated June 28, 2019, and is first being mailed to unitholders on or about June 28, 2019.


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TABLE OF CONTENTS

 

REFERENCES TO ADDITIONAL INFORMATION

     1  

ABOUT THIS CONSENT STATEMENT/PROSPECTUS

     1  

QUESTIONS AND ANSWERS

     2  

SUMMARY

     7  

Information About the Parties

     7  

The Merger and the Merger Agreement

     8  

Amended and Restated MPLX Partnership Agreement

     9  

Required Approval of the Merger by ANDX Unitholders

     9  

MPC’s Ownership Interest in and Control of ANDX and MPLX

     9  

Recommendation of the ANDX Board

     10  

Reasons for the Recommendation of the ANDX Board

     10  

Opinion of Financial Advisor to the ANDX Conflicts Committee

     10  

No MPLX Unitholder Approval Required

     10  

Interests of Directors and Executive Officers of ANDX GP in the Merger

     10  

Conditions to the Completion of the Merger

     11  

Termination

     13  

No Dissenters’ Rights

     13  

Litigation Related to the Merger

     13  

Regulatory Matters

     13  

Material U.S. Federal Income Tax Consequences of the Merger

     14  

Accounting Treatment of the Merger

     14  

Listing of MPLX Common Units; Delisting and Deregistration of ANDX Common Units

     15  

Comparison of Unitholders’ Rights

     15  

Risk Factors

     15  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF MPLX

     17  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF ANDX

     19  

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA

     21  

COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER UNIT FINANCIAL DATA

     23  

COMPARATIVE PER UNIT MARKET PRICE AND DISTRIBUTION INFORMATION

     25  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     26  

RISK FACTORS

     28  

INFORMATION ABOUT THE PARTIES

     37  

WRITTEN CONSENTS OF HOLDERS OF ANDX COMMON UNITS

     39  

ANDX Common Units Entitled to Consent and Consent Required

     39  

Submission of Consents

     40  

Revocation of Consents

     40  

Expenses

     40  

THE MERGER

     41  

Transaction Structure

     41  

Consideration to ANDX Common Unitholders

     41  

Consideration to ANDX Series A Preferred Unitholders

     41  

Consideration to ANDX TexNew Mex Unitholders and ANDX Special Limited Partner Interest

     41  

Background of the Merger

     42  

Amended and Restated MPLX Partnership Agreement

     57  

Recommendation of the ANDX Board

     57  

Reasons for the Recommendation of the ANDX Board

     58  

Opinion of Financial Advisor to the ANDX Conflicts Committee

     59  

Unaudited Forecasted Financial Information

     66  

Recommendation of the MPLX Board

     70  

Reasons of the MPLX Board for the Merger

     70  

 

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Regulatory Approvals

     72  

MPC’s Ownership Interest In and Control of ANDX and MPLX

     72  

Interests of Directors and Executive Officers of ANDX GP in the Merger

     73  

Merger-Related Compensation

     77  

Indebtedness Following the Merger

     78  

Indemnification and Insurance

     78  

Listing of MPLX Common Units; Delisting and Deregistration of ANDX Common Units

     79  

Consent Solicitation Costs

     79  

No Dissenters’ Rights

     79  

Litigation Related to the Merger

     79  

No MPLX Unitholder Approval Required

     79  

Accounting Treatment of the Merger

     79  

THE MERGER AGREEMENT

     80  

Explanatory Note Regarding the Merger Agreement

     80  

The Merger

     80  

Closing and Effective Time of the Merger

     80  

Merger Consideration

     81  

Treatment of ANDX Phantom Units in the Merger

     82  

Exchange Procedures

     82  

Termination of the Exchange Fund

     83  

Lost, Stolen or Destroyed Unit Certificates

     84  

Adjustments to Prevent Dilution

     84  

Organizational Documents

     84  

Distributions on MPLX Common Units and MPLX Series B Preferred Units

     84  

Representations and Warranties

     85  

Interim Operations of MPLX and ANDX Pending the Merger

     89  

Reasonable Best Efforts; Regulatory Filings and Other Actions

     92  

Transaction Litigation

     92  

Access and Reports

     92  

Stock Exchange Listing and Delisting

     93  

Distribution Cooperation

     93  

Tax Treatment

     93  

Conflicts Committees

     94  

New MPLX Interests

     94  

Conditions to the Completion of the Merger

     94  

Termination

     96  

Expenses

     97  

Indemnification; Directors’ and Officers’ Insurance

     97  

Modification and Amendment

     98  

Remedies

     98  

Support Agreement

     98  

Amendment to Omnibus Agreement

     98  

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

     99  

MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF MPLX UNIT OWNERSHIP

     105  

STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES

     125  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

     126  

NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS

     131  

COMPARISON OF UNITHOLDERS’ RIGHTS

     139  

COMPARISON OF PREFERRED UNITHOLDERS’ RIGHTS

     160  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT/DIRECTORS OF ANDX

     167  

NO DISSENTERS’ RIGHTS

     169  

LEGAL MATTERS

     170  

EXPERTS

     171  

WHERE YOU CAN FIND MORE INFORMATION

     172  

ANNEX A – MERGER AGREEMENT

  

ANNEX B – OPINION OF GOLDMAN SACHS & CO. LLC

  

ANNEX C – FORM OF AMENDED AND RESTATED MPLX PARTNERSHIP AGREEMENT

  

 

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REFERENCES TO ADDITIONAL INFORMATION

This consent statement/prospectus incorporates important business and financial information about ANDX and MPLX from other documents that ANDX and MPLX have filed with the U.S. Securities and Exchange Commission (the “SEC”) and that are contained in or incorporated by reference herein. For a listing of documents incorporated by reference herein, please see the section entitled “Where You Can Find More Information” beginning on page 172. This information is available for you to review free of charge through the SEC’s website at www.sec.gov.

You may request copies of this consent statement/prospectus and any of the documents incorporated by reference herein or other information concerning ANDX or MPLX, without charge, upon written or oral request to the applicable company’s principal executive offices. The respective addresses and telephone numbers of such principal executive offices are listed below.

 

For ANDX:
Andeavor Logistics LP
200 East Hardin Street
Findlay, Ohio 45840
Attention: Investor Relations
419-421-2414
ir@marathonpetroleum.com
  For MPLX:
MPLX LP
200 East Hardin Street
Findlay, Ohio 45840
Attention: Investor Relations
419-421-2414
MPLXInvestorRelations@marathonpetroleum.com

To obtain timely delivery of these documents prior to the conclusion of the consent process, holders of ANDX Common Units must request the information no later than July 22, 2019.

ABOUT THIS CONSENT STATEMENT/PROSPECTUS

This document, which forms part of a registration statement on Form S-4 filed with the SEC by MPLX (File No. 333-231798), constitutes a prospectus of MPLX under Section 5 of the Securities Act of 1933, as amended (the “Securities Act”), with respect to the MPLX Common Units and MPLX Series B Preferred Units to be issued to holders of ANDX Common Units (“ANDX Common Unitholders”) and holders of ANDX Series A Preferred Units (“ANDX Series A Preferred Unitholders” and, together with ANDX Common Unitholders, the “ANDX Unitholders”), respectively, pursuant to the Merger Agreement, as such agreement may be amended from time to time.

MPLX has supplied all information contained or incorporated by reference herein relating to MPLX, and ANDX has supplied all information contained or incorporated by reference herein relating to ANDX. MPLX and ANDX have both contributed to the information relating to the Merger contained in this consent statement/prospectus.

You should rely only on the information contained in or incorporated by reference herein in connection with the giving or withholding of any consent or any investment decision in connection with the Merger. MPLX and ANDX have not authorized anyone to provide you with information that is different from that contained or incorporated by reference herein. This consent statement/prospectus is dated June 28, 2019, and you should not assume that the information contained in this consent statement/prospectus is accurate as of any date other than such date unless otherwise specifically provided herein. Further, you should not assume that the information incorporated by reference herein is accurate as of any date other than the date of the incorporated document. Neither the mailing of this consent statement/prospectus to ANDX Common Unitholders and ANDX Series A Preferred Unitholders, nor the issuance by MPLX of MPLX Common Units or MPLX Series B Preferred Units pursuant to the Merger Agreement will create any implication to the contrary.

MPLX Common Units and ANDX Common Units are traded on the New York Stock Exchange (the “NYSE”) under the symbols “MPLX” and “ANDX”, respectively.

 

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QUESTIONS AND ANSWERS

The following section provides brief answers to certain questions that you may have regarding the Merger Agreement and the Merger. Please note that this section does not address all issues that may be important to you as an ANDX Common Unitholder or an ANDX Series A Preferred Unitholder. Accordingly, you should carefully read this entire consent statement/prospectus, including each of the annexes, and the documents that have been incorporated by reference into this consent statement/prospectus.

 

Q:

Why am I receiving this consent statement/prospectus?

 

A:

This consent statement/prospectus is being provided by ANDX to holders of ANDX Common Units in connection with the Merger and the issuance of MPLX Common Units to ANDX Common Unitholders in connection with the Merger.

ANDX, MPLX and their general partners have agreed to combine the businesses of ANDX and MPLX by merging Merger Sub, a direct, wholly owned subsidiary of MPLX, with and into ANDX with ANDX being the surviving entity and becoming a direct, wholly owned subsidiary of MPLX. The approval and adoption of the Merger Agreement and the Merger by ANDX requires the affirmative vote or consent of (i) holders of at least a majority of the outstanding ANDX Common Units and (ii) ANDX GP and ANDX Refining Southwest, as holders of ANDX Common Units subject to the lower Affiliated Unitholder Exchange Ratio. If you are a record holder of outstanding ANDX Common Units as of the close of business on June 28, 2019 (the “Record Date”), you may complete, date and sign the enclosed written consent and promptly return it to ANDX. This consent statement/prospectus contains important information about the Merger Agreement, the Merger and the other actions contemplated thereby, and you should read this consent statement/prospectus carefully.

ANDX Series A Preferred Unitholders are receiving this consent statement/prospectus as information only.

 

Q:

Who is entitled to give written consent with respect to the Merger?

 

A:

The ANDX Board has set the Record Date for determining holders of outstanding ANDX Common Units entitled to sign and deliver written consents with respect to the Merger. Holders of outstanding ANDX Common Units as of the close of business on the Record Date will be entitled to consent to the approval and adoption of the Merger Agreement and the Merger using the written consent furnished with this consent statement/prospectus.

 

Q:

What unitholder approval is required to adopt the Merger Agreement?

 

A:

The approval and adoption of the Merger Agreement and the Merger by ANDX requires the affirmative vote or consent of (i) holders of at least a majority of the outstanding ANDX Common Units and (ii) ANDX GP and ANDX Refining Southwest, as holders of ANDX Common Units subject to the lower Affiliated Unitholder Exchange Ratio. Pursuant to the terms of the Support Agreement, ANDX GP and ANDX Refining Southwest, which, as of May 7, 2019, together beneficially owned 156,173,128 ANDX Common Units, representing approximately 64% of the outstanding ANDX Common Units, have agreed to deliver the ANDX Written Consent within two business days after the effectiveness of the registration statement of which this consent statement/prospectus forms a part. The delivery of the ANDX Written Consent by ANDX GP and ANDX Refining Southwest with respect to the ANDX Common Units they own will be sufficient to adopt the Merger Agreement and thereby approve the Merger, without the receipt of written consent from any other holder of ANDX Common Units. In addition, approval and adoption of the Merger Agreement and the Merger does not require the vote or consent of other limited partners of ANDX pursuant to the terms of the ANDX Partnership Agreement.

 

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Q:

Does the ANDX Board recommend that holders of ANDX Common Units adopt the Merger Agreement and consent to the Merger?

 

A:

Yes. Based upon the “Special Approval” by the ANDX Conflicts Committee under the ANDX Partnership Agreement and receipt of the recommendation of the ANDX Conflicts Committee that the ANDX Board approve the Merger Agreement and the consummation of the transactions contemplated thereby, including the Merger, the ANDX Board unanimously determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are in, or not opposed to, the best interests of ANDX and its subsidiaries treated as a single consolidated entity, approved and declared advisable the Merger Agreement, the other Transaction Documents and the transactions contemplated thereby, including the Merger, and recommended that the ANDX Common Unitholders approve the Merger and the Merger Agreement. In considering the recommendation of the ANDX Board with respect to the Merger Agreement and the transactions contemplated thereby, including the Merger, you should be aware that directors and executive officers of ANDX GP are parties to agreements or participants in other arrangements that give them interests in the Merger that may be different from, or in addition to, your interests as a unitholder of ANDX. You should consider these interests in determining whether to provide your written consent. These different interests are described under “The Merger—Interests of Directors and Executive Officers of ANDX GP in the Merger” beginning on page 73 of this consent statement/prospectus.

 

Q:

What is executive officer compensation and why are ANDX Common Unitholders being asked to consent to it?

 

A:

The SEC has adopted rules that require ANDX to seek a non-binding, advisory vote on the compensation payments that will or may be made to its named executive officers that is based on or otherwise relates to the Merger. ANDX urges its unitholders to read the section entitled “The Merger—Interests of Directors and Executive Officers of ANDX GP in the Merger” beginning on page 73 and “The Merger—Merger-Related Compensation” beginning on page 77.

 

Q:

What will happen to ANDX as a result of the Merger?

 

A:

If the Merger is successfully completed, Merger Sub will be merged with and into ANDX, with ANDX being the surviving entity, and ANDX will become a direct, wholly owned subsidiary of MPLX.

 

Q:

What will holders of ANDX Common Units be entitled to receive in the Merger?

 

A:

Except as set forth below, each holder of ANDX Common Units, other than any ANDX Common Unit held by ANDX GP and ANDX Refining Southwest, issued and outstanding immediately prior to the effective time of the Merger will be entitled to receive MPLX Common Units in exchange for such holder’s ANDX Common Units at the Public Unitholder Exchange Ratio.

Each of ANDX GP and ANDX Refining Southwest will be entitled to receive MPLX Common Units in exchange for each such holder’s ANDX Common Units at the Affiliated Unitholder Exchange Ratio for ANDX Common Units held by each such holder that were issued and outstanding immediately prior to the effective time of the Merger.

If the Public Unitholder Exchange Ratio or Affiliated Unitholder Exchange Ratio would result in the ANDX Common Unitholder being entitled to receive, after combining all fractional units (rounded to three decimal places) to which such holder would otherwise be entitled to receive in connection with the Merger, a fraction of an MPLX Common Unit, such holder will receive cash (without interest, rounded to the nearest cent) in lieu of such fractional MPLX Common Unit in an amount equal to the product obtained by multiplying (i) the aggregated amount of the fractional interest in MPLX Common Units to which such holder would be entitled and (ii) an amount equal to the average of the volume weighted average price per unit of MPLX Common Units on the NYSE (as reported by Bloomberg L.P. or, if not reported therein, in another authoritative source mutually selected by MPLX and ANDX) on each of the ten consecutive trading days ending with the complete trading day immediately prior to the effective time of the Merger.

 

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For additional information regarding exchange procedures, please read the section entitled “The Merger Agreement—Exchange Procedures” beginning on page 82.

 

Q:

What will holders of ANDX Series A Preferred Units be entitled to receive in the Merger?

 

A:

As a result of the Merger, each ANDX Series A Preferred Unit issued and outstanding immediately prior to the effective time of the Merger will be converted into a right for the holder of such unit to receive a newly issued MPLX Series B Preferred Unit. The MPLX Series B Preferred Units will have substantially equivalent preferences, rights, powers, duties and obligations as the ANDX Series A Preferred Units and will rank pari passu with the Series A Preferred Units representing limited partner interests in MPLX (each, an “MPLX Series A Preferred Unit” and, collectively, the “MPLX Series A Preferred Units”) with respect to distributions and rights upon liquidation.

 

Q:

What will holders of ANDX TexNew Mex Units (as defined below), ANDX Phantom Units and the ANDX Special Limited Partner Interest (as defined below) be entitled to receive in the Merger?

 

A:

Each outstanding TexNew Mex Unit (each, an “ANDX TexNew Mex Unit” and, collectively, the “ANDX TexNew Mex Units”), as defined in the ANDX Partnership Agreement, all of which are held by ANDX Refining Southwest, will be automatically converted into a right to receive a new limited partner interest in MPLX (each, an “MPLX TexNew Mex Unit” and, collectively, the “MPLX TexNew Mex Units”), which will have substantially equivalent rights, duties, powers and obligations as the ANDX TexNew Mex Unit.

Each ANDX Phantom Unit, other than any ANDX Director Phantom Unit, whether vested or unvested, will be converted into a phantom unit denominated in MPLX Common Units (each, a “Converted MPLX Phantom Unit and, collectively, the “Converted MPLX Phantom Units”). The number of MPLX Common Units subject to each Converted MPLX Phantom Unit will be equal to the product (rounded down to the nearest whole number) of (x) the number of ANDX Common Units subject to such ANDX Phantom Unit immediately prior to the effective time of the Merger multiplied by (y) the Public Unitholder Exchange Ratio. Any then-accumulated distribution equivalent amounts payable pursuant to distribution equivalent rights with respect to each ANDX Phantom Unit will carry over and be paid to the holder upon the vesting of the Converted MPLX Phantom Unit that corresponds to the ANDX Phantom Unit to which such distribution equivalent amounts relate. Each ANDX Director Phantom Unit will be converted into the right to receive (without interest), as soon as reasonably practicable after the effective time of the Merger, a cash payment equal to (i) the number of ANDX Common Units subject to the ANDX Director Phantom Unit immediately prior to the effective time of the Merger, whether or not vested, multiplied by (ii) the product of (A) the Public Unitholder Exchange Ratio and (B) the average of the volume weighted average price per unit of MPLX Common Units on the NYSE (as reported by Bloomberg L.P. or, if not reported therein, in another authoritative source mutually selected by MPLX and ANDX) on each of the ten consecutive trading days ending with the complete trading day immediately prior to the closing date of the Merger (the “Closing Date”).

The ANDX Special Limited Partner Interest, as defined in the ANDX Partnership Agreement, outstanding immediately prior to the effective time of the Merger will be converted into the right to receive a new special limited partner interest in MPLX with substantially equivalent rights, powers, duties and obligations as the ANDX Special Limited Partner Interest (the “MPLX Special Limited Partner Interest”).

 

Q:

Where will ANDX Common Units and MPLX Common Units trade after the Merger?

 

A:

ANDX Common Units will no longer be publicly traded following the Merger and will be delisted from the NYSE. MPLX Common Units will continue to trade on the NYSE under the symbol “MPLX.”

 

Q:

What happens to future distributions with respect to ANDX Common Units?

 

A:

If the Merger is successfully consummated, all outstanding ANDX Common Units will be converted into the right to receive MPLX Common Units at the Public Unitholder Exchange Ratio or Affiliated Unitholder

 

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  Exchange Ratio, as applicable (subject to the exchange procedures detailed below in “The Merger Agreement—Exchange Procedures” beginning on page 82) and will be entitled to receive future distributions on such MPLX Common Units to the same extent as other holders of MPLX Common Units in accordance with the Fifth Amended and Restated Agreement of Limited Partnership of MPLX, which will amend and restate MPLX’s current Fourth Amended and Restated Agreement of Limited Partnership prior to the consummation of the Merger in the form attached hereto as Annex C (such partnership agreement prior to and following its amendment and restatement, as applicable, the “MPLX Partnership Agreement”). MPLX and ANDX will coordinate the record dates of any quarterly distributions during the period from the execution of the Merger Agreement to the effective date of the Merger so that no holder of ANDX Common Units will receive two distributions, or fail to receive one distribution, for any single calendar quarter with respect to its applicable ANDX Common Units or MPLX Common Units received pursuant to the Merger in exchange therefor. For a description of the distribution provisions of the ANDX Partnership Agreement and the MPLX Partnership Agreement, please read the section entitled “Comparison of Unitholders’ Rights” beginning on page 139.

Prior to the effective time of the Merger, subject to the coordination of distributions noted above, ANDX GP will determine, declare and cause ANDX to pay regular quarterly cash distributions on the ANDX Common Units for each quarter in accordance with the ANDX Partnership Agreement in the ordinary course and consistent with past practice, including with respect to amount and timing of record dates and payment dates; provided, however that, subject to applicable law, the coordination of distributions noted above and the ANDX Partnership Agreement, any such regular quarterly distribution will not be less than $1.03 per ANDX Common Unit without the separate determination and approval of the ANDX Conflicts Committee.

 

Q:

How can holders of ANDX Common Units return their written consents with respect to the Merger?

 

A:

If you hold ANDX Common Units as of the close of business on the Record Date and you wish to submit your consent with respect to the Merger, you must fill out the enclosed written consent, date and sign it, and promptly return it to ANDX. Once you have completed, dated and signed your written consent, deliver it to ANDX by one of the means described in the section entitled “Written Consents of Holders of ANDX Common Units—Submission of Consents” beginning on page 40. ANDX does not intend to hold a meeting of holders of ANDX Common Units to consider the Merger Agreement and the Merger.

 

Q:

Can holders of ANDX Common Units change or revoke their written consents?

 

A:

Yes. If you are a record holder of ANDX Common Units on the Record Date, you may revoke your consent or, if you have previously revoked your consent, submit a new written consent at any time before the later of 20 business days after the date this consent statement/prospectus is sent to ANDX unitholders and the date on which the consents of a sufficient number of ANDX Common Units to approve the Merger Agreement have been delivered to the secretary of ANDX. If you wish to change or revoke your consent before that time, you may do so by sending in a new written consent with a later date by one of the means described in the section entitled “Written Consents of Holders of ANDX Common Units—Submission of Consents” beginning on page 40, or delivering a notice of revocation to the secretary of ANDX.

 

Q:

If my ANDX Common Units are held in “street name” by my bank, brokerage firm or other nominee, will my bank, brokerage firm or other nominee automatically consent for me?

 

A:

No. If you hold your ANDX Common Units in “street name” with a bank, brokerage firm or other nominee, you should follow the instructions provided by your bank, brokerage firm or other nominee.

 

Q:

Should holders of ANDX Common Units tender their ANDX Common Units now?

 

A:

No. After the Merger is completed, holders of ANDX Common Units who hold their ANDX Common Units in registered form will receive written instructions for exchanging their ANDX Common Units. If you own

 

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  ANDX Common Units in “street name,” the applicable merger consideration should be credited to your account in accordance with the policies and procedures of your broker or nominee within a few days following the Closing Date.

 

Q:

When will the Merger be completed?

 

A:

ANDX and MPLX are working to complete the Merger as soon as possible. A number of conditions must be satisfied before ANDX and MPLX can complete the Merger. ANDX and MPLX expect to complete the Merger as soon as practicable following the effectiveness of the registration statement of which this consent statement/prospectus forms a part. Please read the section entitled “The Merger Agreement—Conditions to the Completion of the Merger” beginning on page 94.

 

Q:

What happens if I sell or transfer my ANDX Common Units before the consent process concludes?

 

A:

If you transfer your ANDX Common Units after the Record Date but before the consent process concludes, you will, unless special arrangements are made, retain your right to consent with respect to the Merger. However, if you transfer your ANDX Common Units at any time before the consent process concludes or the effective time of the Merger, you will not receive the applicable merger consideration for the ANDX Common Units you have transferred.

 

Q:

What percentage of MPLX Common Units will current holders of ANDX Common Units own after the successful consummation of the Merger?

 

A:

If the Merger is successfully completed, public holders of ANDX Common Units prior to the Merger, not including ANDX GP and ANDX Refining Southwest, will collectively receive MPLX Common Units representing approximately 9.6% of the outstanding MPLX Common Units, not including any MPLX Common Units issuable upon conversion of the MPLX Series A Preferred Units or in respect of the Converted MPLX Phantom Units.

 

Q:

What are the expected U.S. federal income tax consequences of the Merger to ANDX Unitholders?

 

A:

It is expected that ANDX Unitholders who receive either MPLX Common Units in exchange for their ANDX Common Units or MPLX Series B Preferred Units in exchange for their ANDX Series A Preferred Units should not recognize any income or gain for U.S. federal income tax purposes as a result of the Merger. It is possible that an ANDX Unitholder could recognize taxable income or gain (i) with respect to any actual or deemed distributions made to a holder in an amount in excess of the holder’s tax basis in the holder’s units, including as a result of cash received in lieu of fractional MPLX Common Units or a net decrease in such holder’s share of nonrecourse liabilities as a result of the Merger, (ii) to the extent contributions of cash or other property to ANDX after the date of the Merger Agreement and prior to the effective time of the Merger are treated as part of a “disguised sale” of property, or (iii) to the extent an ANDX Common Unitholder is treated as receiving any non-pro rata merger consideration. ANDX and MPLX do not expect any ANDX Unitholders to recognize income or gain in this manner. For additional information, please read the section entitled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 99.

 

Q:

Are holders of ANDX Common Units entitled to appraisal rights?

 

A:

No. Holders of ANDX Common Units do not have appraisal rights under applicable law or contractual appraisal rights under the ANDX Partnership Agreement or the Merger Agreement.

 

Q:

Who do I call if I have further questions about the Merger Agreement or the Merger?

 

A:

Holders of ANDX Common Units and ANDX Series A Preferred Units may call ANDX Investor Relations at 419-421-2414 if they have further questions or if they would like additional copies, without charge, of this consent statement/prospectus.

 

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SUMMARY

This summary highlights selected information included in this consent statement/prospectus and does not contain all the information that may be important to you. To fully understand the Merger Agreement and the transactions contemplated thereby and for a more complete description of the terms of the Merger Agreement, you should read carefully this entire consent statement/prospectus, including the annexes, as well as the documents incorporated by reference into this consent statement/prospectus, and the other documents to which you are referred. In addition, ANDX and MPLX incorporate by reference important business and financial information about ANDX and MPLX into this document, as further described in the section entitled “Where You Can Find More Information” beginning on page 172. You may obtain the information incorporated by reference into this document without charge by following the instructions in the section entitled “Where You Can Find More Information” beginning on page 172. Each item in this summary includes a page reference directing you to a more complete description of that item.

Information About the Parties (page 37)

ANDEAVOR LOGISTICS LP

200 East Hardin Street

Findlay, Ohio 45840

Phone: 419-421-2414

ANDX is a fee-based, full-service, diversified midstream logistics company with integrated assets across the western and mid-continent regions of the United States. ANDX was formed by Andeavor and its wholly owned subsidiary, ANDX GP, in 2010 as a Delaware master limited partnership to own, operate, develop and acquire logistics assets. ANDX operates through three business segments: Terminalling and Transportation, Gathering and Processing and Wholesale. The Terminalling and Transportation segment consists of marine terminals, refined product truck terminals, rail terminals, dedicated storage facilities and transportation pipelines. The Gathering and Processing segment consists of crude oil gathering systems and pipelines as well as natural gas gathering pipelines, processing facilities and fractionation facilities. The Wholesale segment consists of a fee-based fuel wholesale business. ANDX is headquartered in Findlay, Ohio. On October 1, 2018, MPC completed its acquisition of Andeavor in accordance with an Agreement and Plan of Merger, dated as of April 29, 2018, as amended, under which MPC acquired Andeavor. MPC controls ANDX through its indirect ownership of 100% of the membership interests of ANDX GP, and it also indirectly owned approximately 64% of the outstanding ANDX Common Units as of June 21, 2019.

TESORO LOGISTICS GP, LLC

200 East Hardin Street

Findlay, Ohio 45840

Phone: 419-421-2414

ANDX GP is a Delaware limited liability company, an indirect, wholly owned subsidiary of MPC and owns the non-economic general partner interest in ANDX.

MPLX LP

200 East Hardin Street

Findlay, Ohio 45840

Phone: 419-421-2414

MPLX is a diversified, large-cap master limited partnership formed in 2012 by MPC. MPLX owns and operates midstream energy infrastructure and logistics assets and provides fuels distribution services. MPLX’s



 

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assets include a network of crude oil and refined petroleum product pipelines; an inland marine business; light-product terminals; storage caverns; refinery tanks, docks, loading racks, and associated piping; and crude and light-product marine terminals. MPLX also owns crude oil and natural gas gathering systems and pipelines as well as natural gas and natural gas liquids (“NGL”) processing and fractionation facilities in key U.S. supply basins. MPLX’s operations are conducted in the following operating segments: Logistics and Storage (“L&S”) and Gathering and Processing (“G&P”). MPLX’s L&S assets are primarily located in the Midwest and Gulf Coast regions of the U.S. while its G&P assets are primarily located in the Northeast and Southwest regions of the U.S. MPC controls MPLX through its indirect ownership of 100% of the membership interests of MPLX GP, and it also indirectly owned approximately 64% of the outstanding MPLX Common Units as of June 21, 2019.

MPLX GP LLC

200 East Hardin Street

Findlay, Ohio 45840

Phone: 419-421-2414

MPLX GP is a Delaware limited liability company, an indirect, wholly owned subsidiary of MPC and owns the non-economic general partner interest in MPLX.

MPLX MAX LLC

200 East Hardin Street

Findlay, Ohio 45840

Phone: 419-421-2414

MPLX MAX LLC (“Merger Sub”) is a direct, wholly owned subsidiary of MPLX. Upon the completion of the Merger, Merger Sub will cease to exist. Merger Sub was formed in Delaware on May 7, 2019 for the sole purpose of effecting the Merger.

The Merger and the Merger Agreement (pages 41 and 80)

The terms and conditions of the Merger are contained in the Merger Agreement, which is attached to this document as Annex A and is incorporated by reference herein in its entirety. You are encouraged to read the Merger Agreement carefully, as it is the legal document that governs the Merger.

The ANDX Board and the board of directors of MPLX GP (the “MPLX Board”) have each unanimously approved the Merger Agreement. The Merger Agreement provides for the acquisition of ANDX by MPLX through the merger of Merger Sub, a wholly owned subsidiary of MPLX, with and into ANDX, with ANDX continuing as the surviving entity in the Merger as a direct, wholly owned subsidiary of MPLX. Each Public Unitholder Eligible Unit will be converted into the right to receive 1.135 MPLX Common Units. Each ANDX Common Unit held by ANDX GP and ANDX Refining Southwest will be converted into the right to receive 1.0328 MPLX Common Units. Each ANDX Series A Preferred Unit issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive an MPLX Series B Preferred Unit with substantially equivalent preferences, rights, powers, duties and obligations as the ANDX Series A Preferred Units. The ANDX Special Limited Partner Interest, which is owned by ANDX Refining Southwest, will be converted into an MPLX Special Limited Partner Interest with substantially equivalent rights, powers, duties and obligations as the ANDX Special Limited Partner Interest, and all of the outstanding ANDX TexNew Mex Units, which are all held by ANDX Refining Southwest, will be converted into MPLX TexNew Mex Units with substantially equivalent rights, powers, duties and obligations as the ANDX TexNew Mex Units.



 

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Each ANDX Phantom Unit, whether vested or unvested, other than any ANDX Director Phantom Unit, will automatically be converted into a phantom unit denominated in MPLX Common Units (the “Converted MPLX Phantom Units”), with the number of ANDX Common Units subject to the Converted MPLX Phantom Units equal to the product (rounded down to the nearest whole number) of (i) the number of ANDX Common Units subject to such ANDX Phantom Unit immediately prior to the effective time of the Merger multiplied by (ii) the Public Unitholder Exchange Ratio. ANDX Director Phantom Units will generally be converted into the right to receive a cash payment equal to the number of ANDX Common Units subject to such ANDX Director Phantom Unit multiplied by the product of the Public Unitholder Exchange Ratio and the average of the volume weighted average price per unit of MPLX Common Units on the NYSE on each of the ten consecutive trading days ending with the complete trading day immediately prior to the Closing Date.

Amended and Restated MPLX Partnership Agreement (Annex C)

The Merger Agreement provides that, prior to the closing, MPLX GP and MPLX will take all actions as are necessary and appropriate to amend and restate the MPLX Partnership Agreement to allow for the creation and issuance of the MPLX Series B Preferred Units, the MPLX Special Limited Partner Interest and the MPLX TexNew Mex Units. For additional information regarding the MPLX Partnership Agreement, see “Comparison of Unitholders’ Rights—MPLX Unitholders” and “Comparison of Preferred Unitholders’ Rights—MPLX Series B Preferred Unitholders” beginning on pages 139 and 160, respectively.

Required Approval of the Merger by ANDX Unitholders (page 39)

The approval and adoption of the Merger Agreement and the Merger by ANDX requires the affirmative vote or consent of (i) holders of at least a majority of the outstanding ANDX Common Units and (ii) ANDX GP and ANDX Refining Southwest, as holders of ANDX Common Units subject to the lower Affiliated Unitholder Exchange Ratio. Pursuant to the terms of the Support Agreement, ANDX GP and ANDX Refining Southwest, which as of the Record Date together beneficially owned 156,173,128 ANDX Common Units, representing approximately 64% of the outstanding ANDX Common Units, have agreed to deliver the ANDX Written Consent within two business days after the effectiveness of the registration statement of which this consent statement/prospectus forms a part. The delivery of the ANDX Written Consent by ANDX GP and ANDX Refining Southwest with respect to the ANDX Common Units they own will be sufficient to adopt the Merger Agreement and thereby approve the Merger, without the receipt of written consent from any other holder of ANDX Common Units. See “Written Consents of Holders of ANDX Common Units” beginning on page 39. In addition, approval and adoption of the Merger Agreement and the Merger does not require the vote or consent of any other limited partners of ANDX pursuant to the terms of the ANDX Partnership Agreement.

MPC’s Ownership Interest in and Control of ANDX and MPLX (page 72)

MPC holds a controlling ownership interest in each of ANDX and MPLX. MPC controls ANDX through MPC’s indirect ownership of 100% of the membership interests of ANDX GP, which owns 100% of the non-economic general partner interest in ANDX, and through MPC’s indirect ownership as of June 21, 2019 of approximately 64% of the outstanding ANDX Common Units. MPC controls MPLX through its indirect ownership of 100% of the membership interests of MPLX GP, which owns 100% of the non-economic general partner interest in MPLX, and through MPC’s indirect ownership as of June 21, 2019 of approximately 64% of the outstanding MPLX Common Units. Following the closing of the Merger, MPC will indirectly own approximately 63% of the outstanding MPLX Common Units, not including any MPLX Common Units issuable upon conversion of the MPLX Series A Preferred Units or in respect of the Converted MPLX Phantom Units, and all of the MPLX TexNew Mex Units and the MPLX Special Limited Partner Interest and continue to indirectly own 100% of the membership interests of MPLX GP.



 

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Recommendation of the ANDX Board (page 57)

The ANDX Board recommends that you deliver your written consent “FOR” the Merger Agreement and the transactions contemplated thereby, including the Merger, and on a non-binding, advisory basis, “FOR” the compensation payments that will or may be made to certain of ANDX’s named executive officers in connection with the Merger. For a further discussion of the recommendation of the ANDX Board, please read the section entitled “The Merger—Recommendation of the ANDX Board” beginning on page 57.

Reasons for the Recommendation of the ANDX Board (page 58)

The reasons for the recommendation of the ANDX Board are described in the section entitled “The Merger—Reasons for the Recommendation of the ANDX Board” beginning on page 58.

Opinion of Financial Advisor to the ANDX Conflicts Committee (page 59)

Goldman Sachs & Co. LLC (“Goldman Sachs”) delivered its opinion to the ANDX Conflicts Committee that, as of May 7, 2019 and based upon and subject to the factors and assumptions set forth therein, the Public Unitholder Exchange Ratio pursuant to the Merger Agreement was fair from a financial point of view to the holders of the Public Unitholder Eligible Units.

The full text of the written opinion of Goldman Sachs, dated May 7, 2019, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex B to this consent statement/prospectus. Goldman Sachs provided advisory services and its opinion for the information and assistance of the ANDX Conflicts Committee in connection with its consideration of the Merger. The Goldman Sachs opinion is not a recommendation as to how any holder of Public Unitholder Eligible Units should vote with respect to the Merger or any other matter. Pursuant to an engagement letter between the ANDX Conflicts Committee and Goldman Sachs, the ANDX Conflicts Committee has agreed to pay Goldman Sachs a transaction fee of $4,000,000, $250,000 of which became payable upon the receipt by the ANDX Conflicts Committee of MPLX’s initial acquisition proposal, and the remainder of which is contingent upon consummation of the Merger. Goldman Sachs may receive an additional fee of up to $2,500,000 at the ANDX Conflicts Committee’s sole discretion.

No MPLX Unitholder Approval Required (page 79)

The approval and adoption of the Merger Agreement and the Merger by MPLX does not require the affirmative vote or consent any holder of MPLX units (the “MPLX Unitholders”).

Interests of Directors and Executive Officers of ANDX GP in the Merger (page 73)

ANDX GP’s executive officers and directors have interests in the Merger and related transactions, that may be different from, or in addition to, the interests of ANDX Unitholders generally. The members of the ANDX Conflicts Committee and the ANDX Board were aware of and considered these interests, among other matters, when they approved the Merger Agreement and recommended that ANDX Common Unitholders approve the Merger. These interests are described in more detail in the section entitled “The Merger—Interests of Directors and Executive Officers of ANDX GP in the Merger” beginning on page 73.



 

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Conditions to the Completion of the Merger (page 94)

Under the Merger Agreement, the respective obligations of MPLX, MPLX GP, ANDX, ANDX GP and Merger Sub to complete the Merger are subject to the satisfaction or waiver at or prior to the closing of the Merger of the following conditions:

 

   

Effectiveness of the Registration Statement. The registration statement of which this consent statement/prospectus forms a part must have become effective under the Securities Act and must not be the subject of any stop order issued by the SEC or any pending proceedings initiated by the SEC seeking such a stop order.

 

   

Written Consent. The written consent of holders of a majority of the outstanding ANDX Common Units approving the Merger Agreement and the transactions contemplated thereby must have been obtained in accordance with applicable law and filed with the minutes of proceedings of ANDX, and such written consent must not have been amended, modified, withdrawn, terminated or revoked.

 

   

No Orders. There must not have been enacted, issued, promulgated, enforced or entered by any court or other governmental entity of competent jurisdiction any permanent, preliminary or temporary injunction or other order, decree, decision, determination or judgment that would delay, restrain, prevent, enjoin or otherwise prohibit consummation of the transactions contemplated by the Merger Agreement.

 

   

NYSE Listing. The MPLX Common Units issuable to the holders of ANDX Common Units pursuant to the Merger Agreement must have been authorized for listing on the NYSE upon official notice of issuance.

 

   

Tax Opinions. MPLX and ANDX must have received tax opinions from their respective legal counsel relating to the classification of their gross income as “qualifying income” within the meaning of Section 7704(d) of the Internal Revenue Code (the “Code”).

Under the Merger Agreement, the respective obligations of MPLX, MPLX GP and Merger Sub to complete the Merger are subject to the satisfaction or waiver of the following additional conditions:

 

   

certain representations and warranties of ANDX and ANDX GP regarding aspects of ANDX’s capitalization must be true and correct as of the date of the Merger Agreement and as of the Closing Date as though made on and as of such date and time (except to the extent that any such representation and warranty expressly speaks as of another date, in which case such representation and warranty will only be required to be so true and correct as of such other date), except for such inaccuracies as would not be material in amount or effect;

 

   

the representations and warranties of ANDX and ANDX GP regarding the absence of any material adverse effect on ANDX and its subsidiaries since December 31, 2018 must be true and correct as of the date of the Merger Agreement;

 

   

certain representations and warranties of ANDX and ANDX GP regarding organization and good standing, corporate authority, approval and fairness, and takeover statutes must be true and correct, without regard to materiality, material adverse effect or similar qualifiers, in all material respects as of the date of the Merger Agreement and as of the closing as though made on and as of such date and time (except to the extent that any such representation and warranty expressly speaks as of another date, in which case such representation and warranty will only be required to be true and correct as of such other date);

 

   

the other representations and warranties of ANDX and ANDX GP must be true and correct, without regard to materiality, material adverse effect or similar qualifiers, as of the date of the Merger Agreement and as of the closing as though made on and as of such date and time (except to the extent



 

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that any such representation and warranty expressly speaks as of another date, in which case such representation and warranty will only be required to be so true and correct as of such other date), other than for such failures to be so true and correct that, individually or in the aggregate, have not had and would not reasonably be expected to have a material adverse effect;

 

   

ANDX and ANDX GP must have performed in all material respects all of their obligations under the Merger Agreement required to be performed at or prior to the Closing Date;

 

   

there must not have occurred any material adverse effect on ANDX and its subsidiaries since the date of the Merger Agreement;

 

   

MPLX, MPLX GP and Merger Sub must have received a certificate signed by an executive officer of ANDX to the effect that the foregoing closing conditions have been satisfied; and

 

   

MPLX must have received an opinion from Jones Day related to certain tax matters as outlined in the Merger Agreement.

Under the Merger Agreement, the respective obligations of ANDX and ANDX GP to complete the Merger is subject to the satisfaction or waiver of the following additional conditions:

 

   

certain representations and warranties of MPLX and MPLX GP regarding aspects of their capitalization and the capitalization of Merger Sub must be true and correct as of the date of the Merger Agreement and as of the date of the closing as though made on and as of such date and time (except to the extent that any such representation and warranty expressly speaks as of another date, in which case such representation and warranty will only be required to be so true and correct as of such other date), except for such inaccuracies as would not be material in amount or effect;

 

   

the representations and warranties of MPLX and MPLX GP regarding the absence of any material adverse effect on MPLX and its subsidiaries since December 31, 2018 must be true and correct as of the date of the Merger Agreement;

 

   

certain representations and warranties of MPLX and MPLX GP regarding due organization and good standing, corporate authority and takeover statutes must be true and correct, without regard to materiality, material adverse effect or similar qualifiers, in all material respects as of the date of the Merger Agreement and as of the closing as though made on and as of such date and time (except to the extent that any such representation and warranty expressly speaks as of another date, in which case such representation and warranty will only be required to be so true and correct as of such other date);

 

   

the other representations and warranties of MPLX and MPLX GP must be true and correct, without regard to materiality, material adverse effect or similar qualifiers, as of the date of the Merger Agreement and as of the date of the closing as though made on and as of such date and time (except to the extent that any such representation and warranty expressly speaks as of another date, in which case such representation and warranty will only be required to be so true and correct as of such other date), other than for such failures to be so true and correct that, individually or in the aggregate, have not had and would not reasonably be expected to have a material adverse effect on MPLX and its subsidiaries;

 

   

MPLX, MPLX GP and Merger Sub must have performed in all material respects all of their obligations under the Merger Agreement required to be performed at or prior to the Closing Date;

 

   

there must not have occurred any material adverse effect on MPLX and its subsidiaries since the date of the Merger Agreement;

 

   

ANDX and ANDX GP must have received a certificate signed by an executive officer of MPLX to the effect that the foregoing closing conditions have been satisfied; and

 

   

ANDX must have received an opinion from Vinson & Elkins L.L.P. related to certain tax matters as outlined in the Merger Agreement.



 

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Termination (page 96)

ANDX and MPLX may terminate the Merger Agreement and abandon the Merger at any time prior to the effective time of the Merger by mutual written consent of ANDX and MPLX.

The Merger Agreement may also be terminated and abandoned by either ANDX or MPLX if:

 

   

the completion of the Merger does not occur by the termination date; or

 

   

any order permanently restraining, enjoining or otherwise prohibiting consummation of the Merger shall become final and non-appealable.

In addition, the Merger Agreement may be terminated and abandoned by ANDX and ANDX GP if there has been a breach of any representation, warranty, covenant or agreement made by MPLX, MPLX GP or Merger Sub in the Merger Agreement, or any such representation and warranty shall have become untrue after the date of the Merger Agreement, such that the condition to closing relating to the accuracy of the representations of MPLX and MPLX GP or the condition to closing relating to the covenants or agreements of MPLX and MPLX GP would not be satisfied, and such breach or condition is not curable or, if curable, is not cured by the termination date.

The Merger Agreement may be further terminated or abandoned by MPLX and MPLX GP if there has been a breach of any representation, warranty, covenant or agreement made by ANDX and ANDX GP in the Merger Agreement, or any such representation and warranty shall have become untrue after the date of the Merger Agreement, such that the condition to closing relating to the accuracy of the representations of ANDX and ANDX GP, or the condition to closing relating to the covenants or agreements of ANDX and ANDX GP would not be satisfied, and such breach or condition is not curable or, if curable, is not cured by the termination date.

No Dissenters’ Rights (page 169)

Holders of ANDX Common Units do not have appraisal rights under applicable law or contractual appraisal rights under the ANDX Partnership Agreement or the Merger Agreement.

Litigation Related to the Merger (page 79)

On June 19, 2019, a purported ANDX Common Unitholder filed a complaint in the United States District Court of the Southern District of New York, captioned Max Pyziur v. Andeavor Logistics LP et al., Case No. 1:19-CV-05714 (the “Pyziur Action”). The Pyziur Action alleges that ANDX and the directors of ANDX GP disseminated a registration statement regarding the proposed Merger in violation of Section 14(a) of the Exchange Act and SEC Rule 14a-9 promulgated thereunder because it omits material information with respect to the Merger and further alleges that the directors of ANDX are liable for these violations as “controlling persons” of ANDX under Section 20(a) of the Exchange Act. The Pyziur Action seeks, among other things, to enjoin the transactions contemplated by the Merger Agreement unless ANDX discloses the allegedly material information that was allegedly omitted from the registration statement, an award of rescissory damages should the Merger be consummated, and an award of attorneys’ fees and expenses.

Additional lawsuits arising out of the Merger may be filed in the future. There can be no assurance that any of the defendants will be successful in the outcome of the pending or any potential future lawsuits. A preliminary injunction could delay or jeopardize the completion of the Merger, and an adverse judgment granting permanent injunctive relief could indefinitely enjoin the completion of the Merger. ANDX believes that the Pyziur Action is without merit and intends to defend vigorously against it and any other lawsuits challenging the Merger.

Regulatory Matters (page 92)

In connection with the Merger, MPLX intends to make all required filings under the Securities Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as well as any required filings or applications with the NYSE. ANDX and MPLX are unaware of any other requirement for the filing of information with, or the obtaining of the approval of, governmental authorities in any jurisdiction that is applicable to the Merger.



 

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The Merger is not reportable under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and therefore no filings with respect to the Merger were required with the Federal Trade Commission (the “FTC”) or the Antitrust Division of the Department of Justice (the “DOJ”).

Material U.S. Federal Income Tax Consequences of the Merger (page 99)

The tax consequences of the Merger to each ANDX Unitholder will depend on such unitholder’s own situation. The tax discussions in this consent statement/prospectus focus on the U.S. federal income tax consequences generally applicable to individuals who are residents or citizens of the U.S. that acquired their units for cash and hold their units as capital assets, and these discussions have only limited application to other unitholders. ANDX Unitholders are urged to consult their tax advisor for a full understanding of the U.S. federal, state, local and foreign tax consequences of the Merger to them.

For U.S. federal income tax purposes, the Merger is intended to be a “merger” of ANDX and MPLX with MPLX treated as the resulting partnership following the Merger.

Accordingly, (1) ANDX will be deemed to contribute all of its assets to MPLX in exchange for (i) MPLX Common Units, MPLX Series B Preferred Units, MPLX TexNew Mex Units and the MPLX Special Limited Partner Interest, (ii) the assumption of ANDX’s liabilities, and (iii) cash received in lieu of fractional MPLX Common Units, followed by (2) a liquidation of ANDX in which (i) MPLX Common Units and cash are distributed to the ANDX Common Unitholders, (ii) MPLX Series B Preferred Units are distributed to the holders of the ANDX Series A Preferred Units, (iii) MPLX TexNew Mex Units are distributed to the holder of ANDX TexNew Mex Units, and (iv) the MPLX Special Limited Partner Interest is distributed to the holder of the ANDX Special Limited Partner Interest. Except (i) with respect to actual or deemed distributions made to an ANDX Unitholder in an amount in excess of the ANDX Unitholder’s tax basis in the unitholder’s units, including as a result of the cash received in lieu of fractional MPLX Common Units or a net decrease in an ANDX Common Unitholder’s share of nonrecourse liabilities as a result of the Merger, (ii) to the extent contributions of cash or other property to ANDX after the date of the Merger Agreement and prior to the effective time of the Merger are treated as part of a “disguised sale” of property, or (iii) to the extent an ANDX Common Unitholder is treated as receiving any non-pro rata merger consideration, no gain or loss should be recognized for U.S. federal income tax purposes by ANDX Unitholders as a result of the Merger. ANDX will specially allocate unrealized gain and loss to the capital accounts of ANDX Common Unitholders in an effort to achieve relative capital accounts consistent with the Public Unitholder Exchange Ratio and the Affiliated Unitholder Exchange Ratio. In the event such allocations are insufficient, ANDX may specially allocate gross income and loss among the ANDX Common Unitholders in the ANDX taxable period ending on the effective date of the Merger to achieve capital accounts consistent with the Public Unitholder Exchange Ratio or the Affiliated Unitholder Exchange Ratio, as applicable. Following the Merger, each holder of MPLX Common Units (each an “MPLX Common Unitholder” and, collectively, the “MPLX Common Unitholders”) and MPLX Series B Preferred Units, including the ANDX Unitholders that receive MPLX Common Units or MPLX Series B Preferred Units in the Merger, will be treated as a partner of MPLX for U.S. federal income tax purposes. For additional information, please read the section entitled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 99.

Accounting Treatment of the Merger (page 79)

In accordance with the guidance under Accounting Standards Codification Topic 805: Business Combinations, the Merger transactions will be accounted for as a reorganization of entities under common control. The assets and liabilities of ANDX transferred between entities under common control will be recorded by MPLX based on MPC’s historical cost basis as of October 1, 2018 resulting from MPC’s preliminary purchase price accounting.



 

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Listing of MPLX Common Units; Delisting and Deregistration of ANDX Common Units (page 79)

MPLX expects to obtain approval to list the MPLX Common Units to be issued pursuant to the Merger Agreement on the NYSE, which approval is a condition to the closing of the Merger. Whether or not the Merger is consummated, all costs and expenses incurred in connection with the Merger Agreement, including legal fees, accounting fees, financial advisory fees and other professional and non-professional fees and expenses, will be paid by the party incurring such expenses, except that MPLX and ANDX will each pay for one-half of (a) any filing fees with respect to the registration statement of which this consent statement/prospectus forms a part and (b) the costs of printing and mailing of this consent statement/prospectus.

Comparison of Unitholders’ Rights (page 139)

Upon completion of the Merger, ANDX Unitholders will become MPLX Unitholders and their rights will be governed by the MPLX Partnership Agreement. There are certain differences between the current rights of ANDX Unitholders under the ANDX Partnership Agreement and the rights to which they will be entitled to as MPLX Unitholders under the MPLX Partnership Agreement. See the sections entitled “Comparison of Unitholders’ Rights” and “Comparison of Preferred Unitholders’ Rights” beginning on pages 139 and 160, respectively, for a comparison of unitholder rights under the ANDX Partnership Agreement and the MPLX Partnership Agreement.

Risk Factors (page 28)

In addition to the other information contained in or incorporated by reference herein, including the matters addressed in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 26, ANDX Unitholders should carefully consider the following risks before deciding whether to consent to the Merger. ANDX Unitholders should also consider the other information in this consent statement/prospectus and the other documents incorporated by reference herein, particularly the risk factors contained in MPLX’s and ANDX’s Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. See the section entitled “Where You Can Find More Information” beginning on page 172.

 

   

The number of MPLX Common Units that holders of ANDX Common Units will be entitled to receive in the Merger is based upon a fixed Public Unitholder Exchange Ratio and Affiliated Unitholder Exchange Ratio. As a result, ANDX Common Unitholders cannot be certain of the precise value of the applicable merger consideration.

 

   

The market price of MPLX Common Units will continue to fluctuate after the Merger.

 

   

The market price of MPLX Common Units may be affected by factors different from those that historically have affected the market price of ANDX Common Units.

 

   

The Merger Agreement may be terminated in accordance with its terms and the Merger may not be completed.

 

   

Failure to complete the Merger could negatively impact the price of MPLX Common Units and the price of ANDX Common Units, as well as MPLX’s and ANDX’s respective future businesses and financial results.

 

   

MPLX Unitholders and ANDX Unitholders will have a reduced ownership in the combined partnership as compared to their ownership in MPLX and ANDX, respectively, prior to the Merger.

 

   

The number of outstanding MPLX Common Units will increase and MPLX will have outstanding an additional class of preferred units as a result of the Merger, which could make it more difficult for MPLX to pay the current level of quarterly distributions.

 

   

A downgrade in MPLX’s credit ratings following the Merger could impact the combined partnership’s access to capital and costs of doing business, and independent third parties control and maintain its credit ratings.



 

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The Merger is subject to conditions, including certain conditions that may not be satisfied, or completed on a timely basis, if at all.

 

   

MPLX and ANDX will be subject to business uncertainties while the Merger is pending, which could adversely affect their respective businesses.

 

   

Directors and executive officers of ANDX GP may have interests in the Merger that are different from, or in addition to, the interests of ANDX Unitholders.

 

   

A lawsuit has been filed challenging the adequacy of the disclosures made in the registration statement of which this consent statement/prospectus forms a part and an adverse ruling in this lawsuit may prevent the Merger from being completed.

 

   

The Merger may not be accretive, and may be dilutive, to MPLX’s earnings per unit, which may negatively affect the market price of MPLX Common Units.

 

   

MPLX and ANDX will incur significant transaction and Merger-related costs in connection with the Merger, which may be in excess of those anticipated by MPLX and ANDX.

 

   

The unaudited pro forma condensed combined financial statements and unaudited forecasted financial information included in this consent statement/prospectus are presented for illustrative purposes only and do not represent the actual financial position or results of operations of the combined partnership following the Merger.

 

   

The integration of MPLX and ANDX may not be as successful as anticipated.

 

   

Even if MPLX and ANDX complete the Merger, MPLX may fail to realize all of the anticipated benefits of the proposed Merger.

 

   

The market price of MPLX Common Units may decline in the future as a result of the sale of MPLX Common Units held by former ANDX Unitholders or current MPLX Unitholders.

 

   

The combined partnership will record goodwill and other intangible assets that could become impaired and result in material non-cash charges to the results of operations of the combined partnership in the future.

 

   

ANDX Unitholders will have different rights as MPLX Unitholders under the MPLX Partnership Agreement than they currently have as ANDX Unitholders under the ANDX Partnership Agreement.

 

   

No ruling has been obtained with respect to the U.S. federal income tax consequences of the Merger.

 

   

The expected U.S. federal income tax consequences of the Merger are dependent upon MPLX and ANDX being treated as partnerships for U.S. federal income tax purposes.

 

   

ANDX Unitholders could recognize taxable income or gain for U.S. federal income tax purposes, in certain circumstances, as a result of the Merger.

 

   

Treatment of preferred distributions as guaranteed payments for the use of capital creates a different tax treatment for the holders of the MPLX Series B Preferred Units than the holders of MPLX Common Units.



 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF MPLX

The following table presents selected historical consolidated financial data for MPLX as of and for the years ended December 31, 2018, 2017, 2016, 2015 and 2014 and selected historical condensed consolidated financial data as of and for the three months ended March 31, 2019 and 2018. The selected historical consolidated financial data for each of the years ended December 31, 2018, 2017 and 2016 and as of December 31, 2018 and 2017 have been derived from MPLX’s audited consolidated financial statements and related notes included in its Annual Report on Form 10-K for the year ended December 31, 2018, which is incorporated by reference herein. The selected historical consolidated financial data of MPLX for each of the years ended December 31, 2015 and 2014 and as of December 31, 2016, 2015 and 2014 have been derived from MPLX’s selected financial data presented in Item 6 included in its Annual Report on Form 10-K for the year ended December 31, 2018, which included recasted historical results of predecessors. The selected historical condensed consolidated financial data as of March 31, 2019 and for the three months ended March 31, 2019 and 2018 have been derived from MPLX’s unaudited condensed consolidated financial statements and related notes contained in its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019, which is incorporated by reference herein. The selected historical condensed consolidated balance sheet data as of March 31, 2018 has been derived from MPLX’s unaudited condensed consolidated financial statements and related notes contained in its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2018, which has not been incorporated by reference herein.

The information set forth below is not necessarily indicative of future results and should be read together with the other information contained in MPLX’s Annual Report on Form 10-K for the year ended December 31, 2018 and its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019, including the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes therein. See the section entitled “Where You Can Find More Information” beginning on page 172.

 

     Year Ended December 31,      Three Months Ended
March 31,
 
     2018      2017      2016      2015      2014      2019      2018  
     (In millions, except per unit amounts)  

Consolidated Statements of Income Data:

                    

Total Revenues and Other Income

   $ 6,425      $ 3,867      $ 3,029      $ 1,101      $ 793      $ 1,646      $ 1,420  

Income from Operations

     2,503        1,191        683        381        245        678        557  

Net Income

     1,834        836        434        333        239        509        423  

Net Income Attributable to MPLX LP

     1,818        794        233        156        121        503        421  

Limited Partners’ Interest in Net Income Attributable to MPLX LP

     1,743        411        1        99        115        483        405  

Net Income Attributable to MPLX LP Per Limited Partner Unit:

                    

Common—Basic

     2.29        1.07        —          1.23        1.55        0.61        0.61  

Common—Diluted

     2.29        1.06        —          1.22        1.55        0.61        0.61  

Subordinated—Basic and Diluted

     —          —          —          0.11        1.50        —          —    

Cash Distributions Declared Per Limited Partner Unit

     2.5300        2.2975        2.0500        1.8200        1.4100        0.6575        0.6175  


 

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     As of December 31,      As of March 31,  
     2018      2017      2016      2015      2014      2019      2018  
     (In millions)  

Consolidated Balance Sheet Data:

                    

Property, Plant and Equipment, Net

   $ 14,639      $ 12,187      $ 11,408      $ 10,214      $ 1,324      $ 14,816      $ 13,291  

Total Assets

     22,779        19,500        17,509        16,404        1,544        23,584        21,006  

Long-Term Debt, Including Capital Leases

     13,392        6,945        4,422        5,255        644        13,832        11,861  

Redeemable Preferred Units

     1,004        1,000        1,000        —          —          1,004        1,000  


 

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF ANDX

The following table presents selected historical consolidated financial data for ANDX as of and for the years ended December 31, 2018, 2017, 2016, 2015 and 2014 and selected historical condensed consolidated financial data as of and for the three months ended March 31, 2019 and 2018. The selected historical consolidated financial data for each of the years ended December 31, 2018, 2017 and 2016 and as of December 31, 2018 and 2017 have been derived from ANDX’s audited consolidated financial statements and related notes included in its Annual Report on Form 10-K for the year ended December 31, 2018, which is incorporated by reference herein. The selected historical consolidated financial data of ANDX for each of the years ended December 31, 2015 and 2014 and as of December 31, 2016, 2015 and 2014 have been derived from ANDX’s selected financial data as presented in Item 6 included in its Annual Report on Form 10-K for the year ended December 31, 2018, which included recasted historical results of predecessors. The selected historical condensed consolidated financial data as of March 31, 2019 and for the three months ended March 31, 2019 and 2018 have been derived from ANDX’s unaudited condensed consolidated financial statements and related notes contained in its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019, which is incorporated by reference herein. The selected historical condensed consolidated balance sheet data as of March 31, 2018 has been derived from ANDX’s unaudited condensed consolidated financial statements and related notes contained in its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2018, which has not been incorporated by reference herein.

The information set forth below is not necessarily indicative of future results and should be read together with the other information contained in ANDX’s Annual Report on Form 10-K for the year ended December 31, 2018 and its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019, including the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes therein. See the section entitled “Where You Can Find More Information” beginning on page 172.

 

    Year Ended December 31,     Three Months
Ended March 31,
 
    2018(a)     2017(a)     2016(a)     2015(a)     2014(a)     2019     2018(a)  
    (In millions, except per unit amounts)  

Statements of Consolidated Operations Data:

             

Revenues(b)

  $ 2,380     $ 3,249     $ 1,669     $ 1,112     $ 600     $ 630     $ 546  

Net Earnings

    600       306       277       249       56       157       131  

Loss Attributable to Predecessors

    28       43       62       43       46       —         8  

Net Earnings Attributable to Noncontrolling Interests

    —         —         —         (20     (3     —         —    

Net Earnings Attributable to Partners

    628       349       339       272       99       157       139  

Preferred Unitholders’ Interest in Net Earnings

    44       3       —         —         —         10       14  

General Partner’s Interest in Net Earnings, Including Incentive Distribution Rights

    —         79       152       73       43       —         —    

Limited Partners’ Interest in Net Earnings

    584       267       187       199       43       147       125  

Subordinated Unitholders’ Interest in Net Earnings

    —         —         —         —         13       —         —    

Net Earnings per Limited Partner Unit:

             

Common—Basic

    2.57       2.11       1.87       2.33       0.96       0.60       0.59  

Common—Diluted

    2.57       2.11       1.87       2.33       0.96       0.60       0.59  

Subordinated—Basic and Diluted

    —         —         —         —         0.62       —         —    

Cash Distributions Paid per Limited Partner Unit

    4.0750       3.8062       3.3070       2.8350       2.4125       1.0300       1.000  


 

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     As of December 31,      As of March 31,  
     2018(a)      2017(a)      2016(a)      2015(a)      2014(a)      2019      2018(a)  
     (In millions)  

Consolidated Balance Sheet Data:

                    

Total Assets

   $ 10,295      $ 9,505      $ 6,589      $ 5,131      $ 4,955      $ 10,534      $ 9,663  

Total Debt, Net of Unamortized Issuance Costs

     4,964        4,128        4,054        2,844        2,544        5,125        4,149  

 

(a)

Includes the historical results related to ANDX and the acquired assets from Andeavor and Andeavor’s subsidiaries. For the years ended 2015 and 2014, retrospectively adjusted amounts for the acquisition of Permian, refining logistics and asphalt assets from Andeavor on August 6, 2018 (the “2018 Drop Down”) are not shown because management does not believe presentation of these impacts is material to an investor’s understanding of ANDX’s current operations. Other than certain assets included in the 2018 Drop Down, Western Refining Logistics, LP (“WNRL”) and transportation regulated by the Federal Energy Regulatory Commission and the Regulatory Commission of Alaska tariffs charged to the sponsor on the refined products pipeline included in the logistics assets acquired in 2014, the acquired assets from Andeavor and Andeavor’s subsidiaries did not record revenue for transactions with Andeavor for certain assets acquired prior to the effective date of each acquisition.

(b)

Due to the adoption of Accounting Standards Codification (“ASC”) 606 effective January 1, 2018, the revenues and costs associated with the fuel purchase and supply arrangements for the year ended December 31, 2018 were netted.



 

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SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA

The following selected unaudited pro forma condensed combined financial statement data has been prepared to assist in the analysis of financial effects of the Merger between MPLX and ANDX. The information under “Pro Forma Condensed Statement of Combined Income Data” in the table below gives effect to the Merger and related transactions as if they had been consummated on January 1, 2018, the beginning of the earliest period presented. The information under “Pro Forma Condensed Combined Balance Sheet Data” in the table below assumes the Merger and related transactions had been consummated on March 31, 2019.

MPC accounted for the acquisition of Andeavor, including its interest in ANDX, using the acquisition method of accounting, which requires Andeavor assets and liabilities to be recorded at fair value as of the acquisition date. MPC will complete a final determination of the fair value of certain assets and liabilities within the one year measurement period from the date of the acquisition as required by FASB ASC Topic 805, “Business Combinations.” Due to the level of effort required to develop fair value measurements, the valuation studies necessary to determine the fair value of assets acquired and liabilities assumed are still considered to be preliminary by MPC, including the underlying cash flows used to determine the fair value of identified intangible assets and economic obsolescence adjustments to property, plant and equipment. The size and the breadth of the Andeavor acquisition necessitates the use of the one-year measurement period to fully analyze all the factors used in establishing the asset and liability fair values as of the acquisition date, including, but not limited to, property, plant and equipment, intangible assets, real property, leases, environmental and asset retirement obligations and the related tax impacts of any changes made. Any potential adjustments made could be material in relation to the preliminary values recorded by MPC and subsequently recorded by MPLX in relation to MPLX’s acquisition of ANDX.

The information presented below should be read in conjunction with the historical consolidated financial statements and related notes of MPLX and ANDX filed by each with the SEC, and incorporated by reference into this document, and with the unaudited pro forma condensed combined financial statements of MPLX and ANDX, including the related notes, appearing in the section entitled “Unaudited Pro Forma Condensed Combined Financial Statements” beginning on page 126. The unaudited pro forma condensed combined financial statements are presented for illustrative purposes only and are not necessarily indicative of results that actually would have occurred or that may occur in the future had the Merger been completed on the dates indicated, or the future operating results or financial position of the combined partnership following the Merger. Future results may vary significantly from the results reflected because of various factors, including those discussed in the section entitled “Risk Factors” beginning on page 28.

 

(in millions, except per unit amounts)    Three
Months
Ended
March 31,
2019
     Year Ended
December 31,
2018
 

Pro Forma Condensed Statement of Combined Income Data:

     

Total Revenues and Other Income

   $ 2,282      $ 8,838  

Income from Operations

     889        3,292  

Net Income

     668        2,422  

Limited Partners’ Interest in Net Income Attributable to MPLX LP

     632        2,315  

Net Income Attributable to MPLX LP per Limited Partner Unit:

     

Common—Basic

     0.60        2.30  

Common—Diluted

     0.60        2.30  

Cash Distribution Declared per Common Unit

     0.72        2.86  


 

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     As of
March 31,
2019
 

Pro Forma Condensed Combined Balance Sheet Data:

  

Total Assets

   $ 40,627  

Long-Term Debt, Including Capital Leases

     18,476  

Total Liabilities

     21,612  

Redeemable Preferred Units

     1,004  

Total Equity

     18,011  


 

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COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER UNIT FINANCIAL DATA

Presented below are MPLX’s and ANDX’s historical and unaudited pro forma per unit data for the three months ended March 31, 2019 and the year ended December 31, 2018. Except for the historical information for the year ended December 31, 2018, the information provided in the table below is unaudited. This information should be read together with the historical consolidated financial statements and related notes of MPLX and ANDX filed by each with the SEC, and incorporated by reference in this consent statement/prospectus, and with the unaudited pro forma condensed combined financial statements included in the section entitled “Unaudited Pro Forma Condensed Combined Financial Statements” beginning on page 126.

The pro forma information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the Merger had been completed as of the beginning of the periods presented, nor is it necessarily indicative of the future operating results or financial position of the combined partnership. The pro forma information, although helpful in illustrating the financial characteristics of the combined partnership under one set of assumptions, do not reflect the benefits of expected cost savings (or associated costs to achieve such savings), opportunities to earn additional revenue, or other factors that may result as a consequence of the Merger and, accordingly, do not attempt to predict or suggest future results. Specifically, the pro forma information excludes projected synergies expected to be achieved as a result of the Merger, including any associated costs that may be required to be incurred to achieve the identified synergies. The pro forma information also excludes the effects of transaction costs associated with the Merger, costs associated with any restructuring, integration activities or asset dispositions resulting from the Merger and expenses associated with accelerated vesting of compensation awards as they are currently not known, and to the extent they occur, are expected to be non-recurring and will not have been incurred at the Closing Date. However, such costs could affect the combined company following the Merger in the period the costs are incurred or recorded. Further, the pro forma information does not reflect the effect of any regulatory actions that may impact the results of the combined company following the Merger.

The historical book value per unit is computed by dividing unitholders’ equity by the number of common units outstanding at the end of the period. The pro forma earnings per unit of the combined partnership is computed by dividing the pro forma earnings by the pro forma weighted average number of units outstanding. The pro forma book value per unit of the combined partnership is computed by dividing total pro forma unitholders’ equity by the pro forma number of common units outstanding at the end of the period. The pro forma book value per unit of the combined partnership is computed as if the Merger had been completed on March 31, 2019.



 

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     Three Months Ended
March 31, 2019
     Year Ended
December 31,
2018
 

MPLX Historical Data:

     

Net income attributable to MPLX per Common Unit

     

Common—Basic

   $ 0.61      $ 2.29  

Common—Diluted

     0.61        2.29  

Cash distributions declared per Common Unit

     0.6575        2.5300  

Net book value per Common Unit

     8.41        8.45  

ANDX Historical Data:

     

Net earnings per Common Unit

     

Common—Basic

   $ 0.60      $ 2.57  

Common—Diluted

     0.60        2.57  

Cash distributions declared per Common Unit

     1.0300        4.105  

Net book value per Common Unit

     16.28        16.58  

Pro Forma Combined Data:

     

Net income attributable to combined partnership per Common Unit

     

Common—Basic

   $ 0.60      $ 2.30  

Common—Diluted

     0.60        2.30  

Cash distributions declared per Common Unit

     0.72        2.86  

Net book value per Common Unit

     16.25        N/A  

Pro Forma Combined Equivalent Data:

     

Net income attributable to combined partnership per Common Unit

     

Common—Basic

   $ 0.64      $ 2.46  

Common—Diluted

     0.64        2.46  

Cash distributions declared per Common Unit

     0.77        3.06  

Net book value per Common Unit

     17.39        N/A  


 

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COMPARATIVE PER UNIT MARKET PRICE AND DISTRIBUTION INFORMATION

Trading Symbols

MPLX Common Units are currently listed on the NYSE under the ticker symbol “MPLX.” ANDX Common Units are currently listed on the NYSE under the ticker symbol “ANDX.”

Comparison of MPLX and ANDX Market Prices and Equivalent Market Value of the Merger Consideration

The following table presents per unit closing prices of MPLX Common Units and ANDX Common Units on (i) May 7, 2019, the last trading day before the public announcement of the Merger, and (ii) June 21, 2019, the most recent practicable trading day before the date of this consent statement/prospectus. This table also presents the equivalent market value per ANDX Common Unit on such dates. The equivalent market value per ANDX Common Unit has been determined by multiplying the closing price of MPLX Common Units on those dates by the applicable exchange ratio, as if the Merger had been effective on such date, rounded to the nearest cent.

 

     MPLX
Common
Units
     ANDX
Common
Units
     Equivalent
Market Value
per ANDX
Common Unit
for Public

Common
Unitholders
     Equivalent
Market Value
per ANDX
Common Unit
for Affiliated

Common
Unitholders
 

May 7, 2019

   $ 32.19      $ 33.85      $ 36.54      $ 33.25  

June 21, 2019

   $ 32.49      $ 36.62      $ 36.88      $ 33.56  

Although the applicable exchange ratios are fixed, the market prices of MPLX Common Units and ANDX Common Units will fluctuate prior to the consummation of the Merger, and the market value of the applicable merger consideration ultimately received by ANDX Common Unitholders will depend on the closing price of MPLX Common Units on the day the Merger is consummated. Thus, ANDX Common Unitholders will not know the exact market value of the applicable merger consideration they will receive until the closing of the Merger.



 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This consent statement/prospectus, and the documents to which ANDX and MPLX refer you in this consent statement/prospectus, as well as oral statements made or to be made by ANDX and MPLX, include certain “forward-looking statements” within the meaning of, and subject to the safe harbor created by, Section 27A of the Securities Act and Section 21E of the Exchange Act, which are referred to as the safe harbor provisions. Words such as “may,” “will,” “could,” “would,” “anticipate,” “estimate,” “expect,” “predict,” “project,” “guidance,” “continue,” “future,” “potential,” “intend,” “plan,” “assume,” “believe,” “forecast,” “look,” “build,” “focus,” “create,” “work,” “continue” or the negative of such terms or other variations thereof and words and terms of similar substance used in connection with any discussion of future plans, actions, or events identify forward-looking statements with respect to the businesses, strategies and plans of ANDX and MPLX, their expectations relating to the Merger and their future financial condition and performance. ANDX and MPLX caution investors that any forward-looking statements are subject to risks and uncertainties that may cause actual results and future trends to differ materially from those matters expressed in or implied by such forward-looking statements. When considering forward-looking statements, investors should keep in mind the risk factors and other cautionary statements described in the section entitled “Risk Factors” beginning on page 28. Investors are cautioned not to place undue reliance on forward-looking statements. Among the risks and uncertainties that could cause actual results to differ from those described in forward-looking statements are the following:

 

   

the risk that the Merger Agreement may be terminated in accordance with its terms and that the Merger may not be completed;

 

   

the risk that the Merger may not be accretive, and may be dilutive, to MPLX’s earnings per unit, which may negatively affect the market price of MPLX Common Units;

 

   

the possibility that MPLX and ANDX will incur significant transaction and other costs in connection with the Merger, which may be in excess of those anticipated by MPLX or ANDX;

 

   

the risk that MPLX may fail to realize the benefits expected from the Merger;

 

   

the risk that the combined partnership may be unable to achieve cost-cutting synergies or that it may take longer than expected to achieve those synergies;

 

   

the risk that any announcements relating to, or the completion of, the Merger could have adverse effects on the market price of MPLX Common Units;

 

   

the risk that the Merger and its announcement and/or completion could have an adverse effect on the ability of MPLX and ANDX to retain customers and retain and hire key personnel and maintain relationships with their suppliers and customers; and

 

   

the risks applicable to MPLX’s and ANDX’s operating results and businesses generally.

Such factors are difficult to predict and in many cases may be beyond the control of MPLX and ANDX. MPLX’s and ANDX’s forward-looking statements are based on assumptions that MPLX and ANDX, respectively, believe to be reasonable but that may not prove to be accurate. Consequently, all of the forward-looking statements MPLX and ANDX make in this document are qualified by the information contained or incorporated by reference herein, including, but not limited to, the information contained under this heading and the information detailed in MPLX’s Annual Report on Form 10-K for the year ended December 31, 2018 and its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019, and in ANDX’s Annual Report on Form 10-K for the year ended December 31, 2018 and its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019. See the section entitled “Where You Can Find More Information” beginning on page 172.



 

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MPLX and ANDX undertake no obligation to update any such forward-looking statements to reflect events or circumstances that occur, or which they become aware of, except as required by applicable law or regulation. Readers are cautioned not to place undue reliance on these forward-looking statements, which are based only on information available as of the date hereof.



 

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RISK FACTORS

In addition to the other information contained in or incorporated by reference herein, including the matters addressed in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 26, ANDX Common Unitholders should carefully consider the following risks before deciding whether to consent to the Merger. ANDX Common Unitholders should also consider the other information in this consent statement/prospectus and the other documents incorporated by reference herein, particularly the risk factors contained in MPLX’s and ANDX’s Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. See the section entitled “Where You Can Find More Information” beginning on page 172.

Risks Relating to the Merger

The number of MPLX Common Units that holders of ANDX Common Units will be entitled to receive in the Merger is based upon a fixed Public Unitholder Exchange Ratio and Affiliated Unitholder Exchange Ratio. As a result, ANDX Common Unitholders cannot be certain of the precise value of the applicable merger consideration.

The Public Unitholder Exchange Ratio and Affiliated Unitholder Exchange Ratio are fixed, meaning that they do not change and are not dependent upon the relative values of MPLX Common Units and ANDX Common Units. There will be no adjustment to the Public Unitholder Exchange Ratio or Affiliated Unitholder Exchange Ratio for changes in the market price of MPLX Common Units or ANDX Common Units prior to the completion of the Merger. If the Merger is completed, there will be a time lapse between the date of this consent statement/prospectus and the date on which ANDX Unitholders entitled to receive the applicable merger consideration actually receive such applicable merger consideration. The market value of MPLX Common Units may fluctuate during and after these periods as a result of a variety of factors, including general market and economic conditions, changes in MPLX’s businesses, operations and prospects and regulatory considerations. Such factors are difficult to predict and in many cases may be beyond the control of MPLX and ANDX. Consequently, at the time ANDX Common Unitholders must decide whether to adopt the Merger Agreement, they will not know the actual market value of the applicable merger consideration they will receive when the Merger is completed. The actual value of the applicable merger consideration received by ANDX Common Unitholders at the completion of the Merger will depend on the market value of the MPLX Common Units at that time. This market value may differ, possibly materially, from the market value of MPLX Common Units at the time the Merger Agreement was entered into or at any other time. For additional information about the ANDX per unit applicable merger consideration, see the section entitled “The Merger Agreement—Merger Consideration” beginning on page 81.

The market price of MPLX Common Units will continue to fluctuate after the Merger.

Upon completion of the Merger, holders of ANDX Common Units will become holders of MPLX Common Units. The market price of MPLX Common Units may fluctuate significantly following completion of the Merger and holders of ANDX Common Units could lose some or all of the value of their investment in MPLX Common Units. In addition, the stock market has experienced significant price and volume fluctuations in recent times which, if they continue to occur, could have a material adverse effect on the market for, or liquidity of, the MPLX Common Units, regardless of MPLX’s actual operating performance.

The market price of MPLX Common Units may be affected by factors different from those that historically have affected the market price of ANDX Common Units.

Upon completion of the Merger, holders of ANDX Common Units will become holders of MPLX Common Units. The businesses of MPLX differ from those of ANDX in certain respects, and, accordingly, the financial position or results of operations and/or cash flows of MPLX after the Merger, as well as the market price of MPLX Common Units, may be affected by factors different from those currently affecting the financial position

 

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or results of operations and/or cash flows of ANDX. Following the completion of the Merger, ANDX will be part of a larger company with other lines of business and a broader geographic footprint, so decisions affecting ANDX may be made in respect of the larger combined business as a whole rather than the ANDX businesses individually. For a discussion of the businesses of MPLX and ANDX and of some important factors to consider in connection with those businesses, see the section entitled “Information About the Parties” beginning on page 37, and the documents incorporated by reference in the section entitled “Where You Can Find More Information” beginning on page 172, including, in particular, in the sections entitled “Risk Factors” in each of MPLX’s Annual Report on Form 10-K for the year ended December 31, 2018 and ANDX’s Annual Report on Form 10-K for the year ended December 31, 2018.

The Merger Agreement may be terminated in accordance with its terms and the Merger may not be completed.

The Merger Agreement is subject to a number of conditions that must be satisfied or waived in order to complete the Merger. Those conditions include, among others: adoption of the Merger Agreement by ANDX Common Unitholders, the accuracy of representations and warranties under the Merger Agreement (subject to the materiality standards set forth in the Merger Agreement) and MPLX’s and ANDX’s performance of their respective obligations under the Merger Agreement in all material respects. These conditions to the closing of the Merger may not be fulfilled in a timely manner or at all, and, accordingly, the Merger may be delayed or may not be completed.

In addition, if the Merger is not completed by November 8, 2019, either MPLX or ANDX may choose not to proceed with the Merger, and the parties can mutually decide to terminate the Merger Agreement at any time. In addition, MPLX and ANDX may elect to terminate the Merger Agreement in certain other circumstances. See the section entitled “The Merger Agreement—Termination” beginning on page 96.

Failure to complete the Merger could negatively impact the price of MPLX Common Units and the price of ANDX Common Units, as well as MPLX’s and ANDX’s respective future businesses and financial results.

If the Merger is not completed for any reason, MPLX’s and ANDX’s respective businesses and financial results may be adversely affected as follows:

 

   

MPLX and ANDX may experience negative reactions from the financial markets, including negative impacts on the market price of MPLX Common Units and ANDX Common Units;

 

   

the manner in which customers, vendors, business partners and other third parties perceive MPLX and ANDX may be negatively impacted, which in turn could affect MPLX’s and ANDX’s marketing operations or their ability to compete for new business or obtain renewals in the marketplace more broadly;

 

   

MPLX and ANDX may experience negative reactions from employees; and

 

   

MPLX and ANDX will have expended time and resources that could otherwise have been spent on MPLX’s and ANDX’s existing businesses and the pursuit of other opportunities that could have been beneficial to each company, and MPLX’s and ANDX’s ongoing business and financial results may be adversely affected.

MPLX Unitholders and ANDX Unitholders will have a reduced ownership in the combined partnership as compared to their ownership in MPLX and ANDX, respectively, prior to the Merger.

At the effective time of the Merger, each ANDX Common Unitholder that receives MPLX Common Units will become an MPLX Common Unitholder, with a percentage of ownership of MPLX that is smaller than such unitholder’s percentage ownership in ANDX prior to the Merger. Following the completion of the Merger, the former holders of ANDX Common Units are estimated to own approximately 25% of the outstanding MPLX Common Units immediately after the Merger and current holders of MPLX Common Units as a group are estimated to own approximately 75% of the outstanding MPLX Common Units immediately after the Merger.

 

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The number of outstanding MPLX Common Units will increase and MPLX will have outstanding an additional class of preferred units as a result of the Merger, which could make it more difficult for MPLX to pay the current level of quarterly distributions.

As of June 21, 2019, there were approximately 794,349,619 MPLX Common Units outstanding. MPLX anticipates that it will issue approximately 263 million MPLX Common Units in connection with the Merger. Accordingly, the aggregate dollar amount required to pay the current per unit quarterly distribution on all MPLX Common Units will increase, which could increase the likelihood that MPLX will not have sufficient funds to pay the current level of quarterly distributions to all MPLX Unitholders. Using a $0.6575 per MPLX Common Unit distribution (the amount MPLX paid with respect to the first fiscal quarter of 2019 on May 15, 2019), the aggregate cash distribution paid to MPLX Unitholders on MPLX Common Units totaled approximately $523 million, including a distribution of approximately $332 million to wholly owned subsidiaries of MPC in respect of MPLX Common Units owned by them. Using the same $0.6575 per MPLX Common Unit distribution, the combined pro forma MPLX distribution with respect to the first fiscal quarter of 2019, had the Merger been completed prior to such distribution and giving effect to the ANDX distribution waiver in effect, would have resulted in total cash distributions of approximately $683 million, including a distribution of approximately $425 million to wholly owned subsidiaries of MPC in respect of MPLX Common Units owned by them.

Further, MPLX will issue 600,000 new MPLX Series B Preferred Units in the Merger. MPLX must pay distributions that have accrued on the MPLX Series A Preferred Units and the new MPLX Series B Preferred Units prior to paying any distributions on the MPLX Common Units. Distributions are payable on the MPLX Series A Preferred Units at a rate of the greater of $0.528125 per quarter per MPLX Series A Preferred Unit or the quarterly distribution that the holder would have received on an as-converted basis. MPLX paid approximately $20 million in distributions on the MPLX Series A Preferred Units for the first quarter of 2019. Distributions will initially accrue on the MPLX Series B Preferred Units at a rate of $68.75 per unit per annum, payable on a semi-annual basis, which amounts to total annual distributions of approximately $41 million. The requirement to pay distributions on the new MPLX Series B Preferred Units increases the likelihood that MPLX will not have sufficient funds to pay the current level of distributions to the holders of MPLX Common Units following the completion of the Merger.

A downgrade in MPLX’s credit ratings following the Merger could impact the combined partnership’s access to capital and costs of doing business, and independent third parties control and maintain its credit ratings.

Following the Merger, MPLX will have more debt outstanding on a consolidated basis than it has prior to the Merger, and the Merger may cause rating agencies to reevaluate MPLX’s ratings. A downgrade of MPLX’s credit ratings might increase MPLX’s cost of borrowing and could require MPLX to post collateral with third parties, negatively impacting its available liquidity. MPLX’s ability to access capital markets could also be limited by a downgrade of its credit ratings and other disruptions.

Credit rating agencies perform independent analysis when assigning credit ratings. The analysis includes a number of criteria including, but not limited to, business composition, market and operational risks, as well as various financial tests. Credit rating agencies continue to review the criteria for industry sectors and various debt ratings and may make changes to those criteria from time to time. Credit ratings are not recommendations to buy, sell or hold investments in the rated entity. Ratings are subject to revision or withdrawal at any time by the rating agencies, and MPLX cannot assure that it will maintain its current credit ratings.

The Merger is subject to conditions, including certain conditions that may not be satisfied, or completed on a timely basis, if at all.

The Merger is subject to a number of conditions beyond ANDX’s and MPLX’s control that may prevent, delay or otherwise materially adversely affect its completion. Neither MPLX nor ANDX can predict whether and when these other conditions will be satisfied. Any delay in completing the Merger could cause the combined

 

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partnership not to realize some or all of the synergies expected to be achieved if the Merger is successfully completed within its expected time frame. Please see the section entitled “The Merger Agreement—Conditions to the Completion of the Merger” beginning on page 94.

MPLX and ANDX will be subject to business uncertainties while the Merger is pending, which could adversely affect their respective businesses.

Uncertainty about the effect of the Merger on employees and customers may have an adverse effect on MPLX and ANDX. These uncertainties could cause customers and others that deal with MPLX and ANDX to seek to change their existing business relationships with MPLX and ANDX, respectively. Retaining employees who provide services to the partnerships may be particularly challenging during the pendency of the Merger, as they may experience uncertainty about their roles with the combined partnership following the Merger. In addition, the Merger Agreement restricts MPLX and ANDX from entering into certain corporate transactions and taking other specified actions without the consent of the other party, and generally requires ANDX to continue its operations in the ordinary course, until completion of the Merger. These restrictions may prevent MPLX and ANDX from pursuing attractive business opportunities that may arise prior to the completion of the Merger. Please see the section entitled “The Merger Agreement—Interim Operations of MPLX and ANDX Pending the Merger,” beginning on page 89, for a description of the restrictive covenants to which MPLX and ANDX are subject.

Directors and executive officers of ANDX GP may have interests in the Merger that are different from, or in addition to, the interests of ANDX Unitholders.

Directors and executive officers of ANDX GP may have interests in the Merger and related transactions, that are different from, or in addition to, the interests of ANDX Unitholders generally. With respect to at least some of the directors and executive officers of ANDX GP, these interests include, among others, positions as directors or officers of MPC, MPLX GP and their respective affiliates; equity holdings in MPC or MPLX; the treatment of outstanding equity-based awards pursuant to the Merger Agreement; and rights to ongoing indemnification and insurance coverage.

These interests are described in more detail in the section entitled “The Merger—Interests of Directors and Executive Officers of ANDX GP in the Merger” beginning on page 73.

A lawsuit has been filed challenging the adequacy of the disclosures made in the registration statement of which this consent statement/prospectus forms a part and an adverse ruling in this lawsuit may prevent the Merger from being completed.

On June 19, 2019, a purported ANDX Common Unitholder filed a complaint in the United States District Court of the Southern District of New York, alleging that ANDX and the directors of ANDX GP disseminated a registration statement regarding the proposed Merger in violation of Section 14(a) of the Exchange Act and SEC Rule 14a-9 promulgated thereunder because it omits material information with respect to the Merger and further alleges that the directors of ANDX are liable for these violations as “controlling persons” of ANDX under Section 20(a) of the Exchange Act.

Additional lawsuits arising out of the Merger may be filed in the future. There can be no assurance that any of the defendants will be successful in the outcome of the pending or any potential future lawsuits. A preliminary injunction could delay or jeopardize the completion of the Merger, and an adverse judgment granting permanent injunctive relief could indefinitely enjoin the completion of the Merger.

The Merger may not be accretive, and may be dilutive, to MPLX’s earnings per unit, which may negatively affect the market price of MPLX Common Units.

In connection with the completion of the Merger, based on the number of issued and outstanding ANDX Common Units as of June 21, 2019, MPLX will issue up to approximately 263 million MPLX Common Units. Additionally, approximately 0.2 million MPLX Common Units are expected to be subject to Converted MPLX

 

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Phantom Units following the Merger. The issuance of these new MPLX Common Units could have the effect of depressing the market price of MPLX Common Units, through dilution of earnings per unit or otherwise. Any dilution of, or delay of any accretion to, MPLX earnings per unit could cause the price of MPLX Common Units to decline or increase at a reduced rate.

MPLX and ANDX will incur significant transaction and Merger-related costs in connection with the Merger, which may be in excess of those anticipated by MPLX and ANDX.

Each of MPLX and ANDX has incurred and will incur substantial expenses in connection with the negotiation and completion of the transactions contemplated by the Merger Agreement, including the costs and expenses of filing, printing and mailing this consent statement/prospectus and all filing and other fees paid to the SEC in connection with the Merger.

MPLX and ANDX expect to continue to incur a number of non-recurring costs associated with completing the Merger, combining the operations of the two partnerships and achieving desired synergies. These fees and costs have been, and will continue to be, substantial. The substantial majority of non-recurring expenses will consist of transaction costs related to the Merger and include, among others, employee retention costs, fees paid to financial, legal and accounting advisors, severance and benefit costs and filing fees.

MPLX and ANDX will also incur transaction fees and costs related to formulating and implementing integration plans, including facilities and systems consolidation costs. MPLX and ANDX will continue to assess the magnitude of these costs, and additional unanticipated costs may be incurred in the Merger and the integration of the two partnerships’ businesses. Although MPLX and ANDX each expects that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, should allow MPLX and ANDX to offset integration-related costs over time, this net benefit may not be achieved in the near term, or at all. See the risk factor entitled “The integration of MPLX and ANDX may not be as successful as anticipated” below.

The costs described above, as well as other unanticipated costs and expenses, could have a material adverse effect on the financial condition and operating results of MPLX following the completion of the Merger.

Many of these costs will be borne by MPLX and/or ANDX even if the Merger is not completed.

The unaudited pro forma condensed combined financial statements and unaudited forecasted financial information included in this consent statement/prospectus are presented for illustrative purposes only and do not represent the actual financial position or results of operations of the combined partnership following the Merger.

The unaudited pro forma condensed combined financial statements and unaudited forecasted financial information contained in this consent statement/prospectus are presented for illustrative purposes only, contain a variety of adjustments, assumptions and preliminary estimates and do not represent the actual financial position or results of operations of MPLX and ANDX prior to the Merger or that of the combined partnership following the Merger for several reasons. See the section entitled “Unaudited Pro Forma Condensed Combined Financial Statements” beginning on page 126. In addition, the Merger and post-Merger integration process may give rise to unexpected liabilities and costs, including costs associated with the defense and resolution of transaction-related litigation or other claims. Unexpected delays in completing the Merger or in connection with the post-Merger integration process may significantly increase the related costs and expenses incurred by MPLX. The actual financial positions and results of operations of MPLX and ANDX prior to the Merger and that of the combined partnership following the Merger may be different, possibly materially, from the unaudited pro forma condensed combined financial statements or forecasted financial information included in this consent statement/prospectus. In addition, the assumptions used in preparing the unaudited pro forma condensed combined financial statements and forecasted financial information included in this consent statement/prospectus may not prove to be accurate

 

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and may be affected by other factors. Any significant changes in the market price of MPLX Common Units may cause a significant change in the purchase price used for MPLX’s accounting purposes and the unaudited pro forma financial statements contained in this consent statement/prospectus.

The integration of MPLX and ANDX may not be as successful as anticipated.

The Merger involves numerous operational, strategic, financial, accounting, legal, tax and other risks; potential liabilities associated with the acquired businesses; and uncertainties related to design, operation and integration of ANDX’s internal control over financial reporting. Difficulties in integrating MPLX and ANDX may result in ANDX performing differently than expected, in operational challenges or in the failure to realize anticipated efficiencies. MPLX’s and ANDX’s existing businesses could also be negatively impacted by the Merger. Potential difficulties that may be encountered in the integration process include, among other factors:

 

   

the inability to successfully integrate the businesses of MPLX and ANDX in a manner that permits MPLX to achieve the full revenue and cost savings anticipated from the Merger;

 

   

complexities associated with managing the larger, more complex, integrated business;

 

   

not realizing anticipated operating synergies;

 

   

integrating personnel who provide services to the two partnerships while maintaining focus on providing consistent, high-quality products and services;

 

   

potential unknown liabilities and unforeseen expenses, delays or regulatory conditions associated with the Merger;

 

   

loss of key personnel who provide services to the two partnerships;

 

   

performance shortfalls at one or both of the partnerships as a result of the diversion of management’s attention caused by completing the Merger and integrating the operations of MPLX and ANDX; and

 

   

the disruption of, or the loss of momentum in, each company’s ongoing business or inconsistencies in standards, controls, procedures and policies.

Even if MPLX and ANDX complete the Merger, MPLX may fail to realize all of the anticipated benefits of the proposed Merger.

The success of the proposed Merger will depend, in part, on MPLX’s ability to realize the anticipated benefits and cost savings from combining MPLX’s and ANDX’s businesses. The anticipated benefits and cost savings of the proposed Merger may not be realized fully or at all, or may take longer to realize than expected or could have other adverse effects that MPLX does not currently foresee. Some of the assumptions that MPLX has made, such as the achievement of operating synergies and the expansion in opportunities for logistics growth in crude oil production basins and regions, may not be realized. The integration process may, for each of MPLX and ANDX, result in the loss of key personnel who provide services to the two partnerships, the disruption of ongoing businesses or inconsistencies in standards, controls, procedures and policies. There could be potential unknown liabilities and unforeseen expenses associated with the Merger that were not discovered in the course of performing due diligence.

The market price of MPLX Common Units may decline in the future as a result of the sale of MPLX Common Units held by former ANDX Unitholders or current MPLX Unitholders.

Following their receipt of MPLX Common Units as consideration in the Merger, former ANDX Common Unitholders may seek to sell the MPLX Common Units delivered to them. Other MPLX Common Unitholders may also seek to sell MPLX Common Units held by them following, or in anticipation of, completion of the Merger. These sales (or the perception that these sales may occur), coupled with the increase in the outstanding number of MPLX Common Units, may affect the market for, and the market price of, MPLX Common Units in an adverse manner.

 

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The combined partnership will record goodwill and other intangible assets that could become impaired and result in material non-cash charges to the results of operations of the combined partnership in the future.

The Merger will be accounted for as a reorganization of entities under common control in accordance with accounting principles generally accepted in the United States. Under a reorganization of entities under common control, the assets and liabilities of ANDX transferred between entities under common control will be recorded by MPLX based on MPC’s historical cost basis resulting from its preliminary purchase price accounting. MPLX will record ANDX’s assets and liabilities at MPC’s basis as of October 1, 2018, the date that common control was first established. See the section entitled “Unaudited Pro Forma Condensed Combined Financial Statements” beginning on page 126.

Effective October 1, 2018, MPC acquired Andeavor, including a controlling interest in ANDX, thus establishing common control between MPLX, ANDX, MPLX GP and ANDX GP. Under MPC’s application of the acquisition method of accounting, a portion of the total purchase price was allocated to ANDX’s tangible assets and liabilities and identifiable intangible assets based on their fair values as of October 1, 2018. The excess of the allocated purchase price over those fair values was recorded as goodwill. MPC’s basis in ANDX’s tangible assets, liabilities, identifiable intangible assets and goodwill will be transferred to MPLX upon completion of the Merger. To the extent the value of goodwill or intangible assets becomes impaired, the combined partnership may be required to incur material non-cash charges relating to such impairment. The combined partnership’s operating results may be significantly impacted from both the impairment and the underlying trends in the business that triggered the impairment.

ANDX Unitholders will have different rights as MPLX Unitholders under the MPLX Partnership Agreement than they currently have as ANDX Unitholders under the ANDX Partnership Agreement.

Upon completion of the Merger, ANDX Unitholders will become MPLX Unitholders and their rights will be governed by the MPLX Partnership Agreement. There are certain differences between the current rights of ANDX Unitholders under the ANDX Partnership Agreement and the rights to which they will be entitled to as MPLX Unitholders under the MPLX Partnership Agreement. See the sections entitled “Comparison of Unitholders’ Rights” and “Comparison of Preferred Unitholders’ Rights” beginning on pages 139 and 160, respectively, for a comparison of unitholder rights under the ANDX Partnership Agreement and the MPLX Partnership Agreement.

Tax Risks of the Merger

No ruling has been obtained with respect to the U.S. federal income tax consequences of the Merger.

No ruling has been or will be requested from the Internal Revenue Service (the “IRS”) with respect to the U.S. federal income tax consequences of the Merger. Please read the section entitled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 99.

The expected U.S. federal income tax consequences of the Merger are dependent upon MPLX and ANDX being treated as partnerships for U.S. federal income tax purposes.

The treatment of the Merger as nontaxable to ANDX Unitholders is dependent upon MPLX and ANDX each being treated as a partnership for U.S. federal income tax purposes. If MPLX or ANDX were treated as a corporation for U.S. federal income tax purposes, the consequences of the Merger would be materially different and the Merger would likely be a fully taxable transaction to ANDX Unitholders. For additional information, please read the section entitled “Material U.S. Federal Income Tax Consequences of the Merger—Assumptions Related to the U.S. Federal Income Tax Treatment of the Merger” beginning on page 100.

ANDX Unitholders could recognize taxable income or gain for U.S. federal income tax purposes, in certain circumstances, as a result of the Merger.

For U.S. federal income tax purposes, (1) ANDX will be deemed to contribute all of its assets to MPLX in exchange for (i) MPLX Common Units, MPLX Series B Preferred Units, MPLX TexNew Mex Units and the

 

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MPLX Special Limited Partner Interest, (ii) the assumption of ANDX’s liabilities, and (iii) cash received in lieu of fractional MPLX Common Units, followed by (2) a liquidation of ANDX in which (i) MPLX Common Units and cash are distributed to the ANDX Common Unitholders, (ii) MPLX Series B Preferred Units are distributed to the holders of the ANDX Series A Preferred Units, (iii) MPLX TexNew Mex Units are distributed to the holder of ANDX TexNew Mex Units, and (iv) the MPLX Special Limited Partner Interest is distributed to the holder of the ANDX Special Limited Partner Interest. The actual receipt of cash and the deemed receipt of cash by ANDX in the Merger could trigger gain to ANDX either because it would be treated as part of a sale or because it exceeds ANDX’s adjusted tax basis in its assets at the closing of the Merger, and any such gain would be allocated to the ANDX Unitholders pursuant to the ANDX Partnership Agreement. ANDX expects that the actual receipt of cash and the deemed receipt of cash by ANDX will qualify for one or more exceptions to sale treatment and ANDX does not currently expect that it will recognize gain as a result of the deemed receipt of cash in the Merger exceeding its adjusted tax basis in its assets. Please read the section entitled “Material U.S. Federal Income Tax Consequences of the Merger—Tax Consequences of the Merger to ANDX” beginning on page 101.

In addition, as a result of the Merger, ANDX Common Unitholders who receive MPLX Common Units will become limited partners of MPLX for U.S. federal income tax purposes and will be allocated a share of MPLX’s nonrecourse liabilities. Each ANDX Common Unitholder will be treated as receiving a deemed cash distribution equal to the excess, if any, of such ANDX Common Unitholder’s share of nonrecourse liabilities of ANDX immediately before the Merger over such ANDX Common Unitholder’s share of nonrecourse liabilities of MPLX immediately following the Merger. If the amount of cash actually received in the Merger plus any deemed cash distribution received by such ANDX Common Unitholder exceeds the ANDX Common Unitholder’s basis in his ANDX Common Units, such ANDX Common Unitholder will recognize gain in an amount equal to such excess. While there can be no assurance, MPLX and ANDX expect that most ANDX Common Unitholders will not recognize gain in this manner. ANDX Series A Preferred Unitholders will not recognize gain in this manner, as ANDX Series A Preferred Unitholders are not allocated any share of ANDX’s nonrecourse liabilities and, as holders of MPLX Series B Preferred Units, will not be allocated any share of MPLX’s nonrecourse liabilities.

Further, the contribution of property or cash by a partner to a partnership in exchange for a new or additional interest in such partnership will generally not result in the recognition of gain or loss by such partner. However, under Section 707 of the Code and the Treasury Regulations promulgated thereunder, a contribution of cash or other property by a partner to a partnership and a transfer of property (other than an interest in such partnership) by the partnership to such partner, may, in certain circumstances, be characterized, in whole or in part, as a “disguised sale” of property by the partnership to the partner, rather than as a non-taxable distribution of such property by the partnership. For example, if a partner contributes cash to a partnership, and within a reasonable period of time before or after the contribution receives a distribution of property (other than an interest in such partnership) with a value approximately equal to the cash contributed, the transfers may be treated as part of a disguised sale of the distributed property. As a result, contributions of cash or other property to ANDX after the date of the Merger Agreement and prior to the effective time of the Merger may be treated as part of a “disguised sale” of a portion of the MPLX Common Units received in the Merger and may result in gain to ANDX. Any such taxable gain recognized by ANDX as part of a “disguised sale” would be allocated to the ANDX Common Unitholders pursuant to the ANDX Partnership Agreement.

Moreover, each ANDX Common Unitholder holding ANDX Common Units outstanding immediately prior to the effective time of the Merger will be entitled to receive MPLX Common Units in the Merger in exchange for such holder’s ANDX Common Units at the Public Unitholder Exchange Ratio or the Affiliated Unitholder Exchange Ratio, as applicable. As a result, there is a risk that public holders of ANDX Common Units could be deemed, for U.S. federal income tax purposes, to have received non-pro rata merger consideration, which could be taxable to such holders. ANDX will specially allocate unrealized gain and loss to the capital accounts of ANDX Common Unitholders in an effort to achieve relative capital accounts consistent with the Public Unitholder Exchange Ratio and the Affiliated Unitholder Exchange Ratio. In the event such allocations are insufficient, ANDX may specially allocate gross income and loss to achieve capital accounts consistent with the

 

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applicable exchange ratio. Although unlikely, other characterizations are possible, and the IRS could take the position that a public holder of ANDX Common Units is required to recognize taxable income with respect to any excess consideration such holder is deemed to receive in the Merger. For additional information, please read the section entitled “Material U.S. Federal Income Tax Consequences of the Merger—Tax Consequences of the Merger to ANDX Unitholders” beginning on page 102.

The amount and effect of any gain that may be recognized for ANDX Unitholders will depend on such ANDX Unitholder’s particular situation, including the ability of such ANDX Unitholder to utilize any suspended passive losses. ANDX Unitholders are urged to consult their tax advisor for a full understanding of the U.S. federal, state, local and foreign tax consequences of the Merger to them. For additional information, please read the sections entitled “Material U.S. Federal Income Tax Consequences of the Merger—Tax Consequences of the Merger to ANDX” and “Material U.S. Federal Income Tax Consequences of the Merger—Tax Consequences of the Merger to ANDX Unitholders” beginning on pages 101 and 102, respectively.

Tax Risks of Holding MPLX Units

You should read and consider risk factors specific to holding MPLX units that will also affect ANDX Unitholders after the completion of the Merger. These risks are described in Part I, Item 1A of MPLX’s Annual Report on Form 10-K for the year ended December 31, 2018, and in other documents that are incorporated by reference herein. See the section entitled “Where You Can Find More Information” beginning on page 172 for the location of information incorporated by reference in this consent statement/prospectus.

Treatment of preferred distributions as guaranteed payments for the use of capital creates a different tax treatment for the holders of the MPLX Series B Preferred Units than the holders of MPLX Common Units

The tax treatment of distributions on the MPLX Series B Preferred Units is uncertain. MPLX will treat the holders of such MPLX Series B Preferred Units as partners for tax purposes and will treat distributions on those MPLX Series B Preferred Units as guaranteed payments for the use of capital that will generally be taxable to the holders of the MPLX Series B Preferred Units as ordinary income. This is consistent with the historical treatment by ANDX of the holders of ANDX Series A Preferred Units that are receiving the MPLX Series B Preferred Units in the Merger. Although a holder of MPLX Series B Preferred Units could recognize taxable income from the accrual of such a guaranteed payment even in the absence of a contemporaneous distribution, MPLX anticipates accruing and making the distributions on such units semi-annually or quarterly, as applicable. The holders of the MPLX Series B Preferred Units are generally not anticipated to share in the partnership’s items of income, gain, loss or deduction, except to the extent necessary to provide, to the extent possible, the MPLX Series B Preferred Units with the benefit of their liquidation preference.

Risks Relating to MPLX’s Business

You should read and consider risk factors specific to MPLX businesses that will also affect the combined partnership after the completion of the Merger. These risks are described in Part I, Item 1A of MPLX’s Annual Report on Form 10-K for the year ended December 31, 2018, and in other documents that are incorporated by reference herein. See the section entitled “Where You Can Find More Information” beginning on page 172 for the location of information incorporated by reference in this consent statement/prospectus.

Risks Relating to ANDX’s Business

You should read and consider risk factors specific to ANDX’s businesses that will also affect the combined partnership after the completion of the Merger. These risks are described in Part I, Item 1A of ANDX’s Annual Report on Form 10-K for the year ended December 31, 2018, and in other documents that are incorporated by reference herein. See the section entitled “Where You Can Find More Information” beginning on page 172 for the location of information incorporated by reference in this consent statement/prospectus.

 

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INFORMATION ABOUT THE PARTIES

ANDEAVOR LOGISTICS LP

200 East Hardin Street

Findlay, Ohio 45840

Phone: 419-421-2414

ANDX is a fee-based, full-service, diversified midstream logistics company with integrated assets across the western and mid-continent regions of the United States. ANDX was formed by Andeavor and its wholly owned subsidiary, ANDX GP, in 2010 as a Delaware master limited partnership to own, operate, develop and acquire logistics assets. ANDX operates through three business segments: Terminalling and Transportation, Gathering and Processing and Wholesale. The Terminalling and Transportation segment consists of marine terminals, refined product truck terminals, rail terminals, dedicated storage facilities and transportation pipelines. The Gathering and Processing segment consists of crude oil gathering systems and pipelines as well as natural gas gathering pipelines, processing facilities and fractionation facilities. The Wholesale segment consists of a fee-based fuel wholesale business. ANDX is headquartered in Findlay, Ohio. On October 1, 2018, MPC completed its acquisition of Andeavor in accordance with the Agreement and Plan of Merger, dated as of April 29, 2018, as amended, under which MPC acquired Andeavor. MPC controls ANDX through its indirect ownership of 100% of the membership interests of ANDX GP. MPC also indirectly owned approximately 64% of the outstanding ANDX Common Units as of June 21, 2019.

TESORO LOGISTICS GP, LLC

200 East Hardin Street

Findlay, Ohio 45840

Phone: 419-421-2414

ANDX GP is a Delaware limited liability company, an indirect, wholly owned subsidiary of MPC and owns the non-economic general partner interest in ANDX.

MPLX LP

200 East Hardin Street

Findlay, Ohio 45840

Phone: 419-421-2414

MPLX is a diversified, large-cap master limited partnership formed in 2012 by MPC. MPLX owns and operates midstream energy infrastructure and logistics assets and provides fuels distribution services. MPLX’s assets include a network of crude oil and refined product pipelines; an inland marine business; light-product terminals; storage caverns; refinery tanks, docks, loading racks, and associated piping; and crude and light-product marine terminals. MPLX also owns crude oil and natural gas gathering systems and pipelines as well as natural gas and NGL processing and fractionation facilities in key U.S. supply basins. MPLX’s operations are conducted in the following operating segments: L&S and G&P. MPLX’s L&S assets are primarily located in the Midwest and Gulf Coast regions of the U.S. while its G&P assets are primarily located in the Northeast and Southwest regions of the U.S. MPC controls MPLX through its indirect ownership of 100% of the membership interests of MPLX GP. MPC also indirectly owned approximately 64% of the outstanding MPLX Common Units as of June 21, 2019.

 

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MPLX GP LLC

200 East Hardin Street

Findlay, Ohio 45840

Phone: 419-421-2414

MPLX GP is a Delaware limited liability company, an indirect, wholly owned subsidiary of MPC and owns the non-economic general partner interest in MPLX.

MPLX MAX LLC

200 East Hardin Street

Findlay, Ohio 45840

Phone: 419-421-2414

Merger Sub is a direct, wholly owned subsidiary of MPLX. Upon the completion of the Merger, Merger Sub will cease to exist. Merger Sub was formed in Delaware on May 7, 2019 for the sole purpose of effecting the Merger.

 

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WRITTEN CONSENTS OF HOLDERS OF ANDX COMMON UNITS

ANDX Common Units Entitled to Consent and Consent Required

Only holders of ANDX Common Units of record at the close of business on the Record Date will be notified of and be entitled to execute and deliver a written consent with respect to the Merger Agreement, the Merger and on a non-binding, advisory basis, the compensation payments that will or may be made to certain of ANDX’s named executive officers in connection with the Merger (the “Non-Binding Compensation Advisory Proposal”).

Approval of the Merger Agreement and the Transactions Contemplated Thereby, Including the Merger

The approval and adoption of the Merger Agreement and the transactions contemplated thereby, including the Merger, by ANDX requires the affirmative vote or consent of (i) holders of at least a majority of the outstanding ANDX Common Units and (ii) ANDX GP and ANDX Refining Southwest, as holders of ANDX Common Units subject to the lower Affiliated Unitholder Exchange Ratio.

Pursuant to the terms of the Support Agreement, ANDX GP and ANDX Refining Southwest, which as of the Record Date together beneficially owned 156,173,128 ANDX Common Units, representing approximately 64% of the outstanding ANDX Common Units, have agreed to deliver the ANDX Written Consent within two business days after the effectiveness of the registration statement of which this consent statement/prospectus forms a part. The delivery of the ANDX Written Consent by ANDX GP and ANDX Refining Southwest with respect to the ANDX Common Units they own will be sufficient to adopt the Merger Agreement and thereby approve the Merger, without the receipt of written consent from any other ANDX Common Unitholder.

In addition, approval and adoption of the Merger Agreement and the Merger does not require the vote or consent of any other limited partners of ANDX pursuant to the terms of the ANDX Partnership Agreement.

Approval of the Non-Binding Compensation Advisory Proposal

Section 14A of the Exchange Act and the applicable SEC rules issued thereunder, which were enacted as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, require that ANDX provide its Common Unitholders with the opportunity to vote to approve, on an advisory (non-binding) basis, the compensation that may be paid or become payable to ANDX’s named executive officers in connection with the Merger, as disclosed in this consent statement/prospectus, including the compensation table and the related narrative named executive officer compensation disclosures set forth in “The Merger—Merger-Related Compensation” beginning on page 77. This vote is commonly referred to as a “golden parachute say on pay” vote. Accordingly, ANDX’s Common Unitholders are being provided with the opportunity to give their consent, on an advisory basis, on those potential payments.

The affirmative vote of the holders of a majority of the outstanding ANDX Common Units entitled to vote on the Non-Binding Compensation Advisory Proposal, is required to approve the Non-Binding Compensation Advisory Proposal.

The proposal to approve the Non-Binding Compensation Advisory Proposal is a vote separate and apart from the consent to approve the Merger Agreement and the Merger. Accordingly, an ANDX Common Unitholder may give consent with respect to one proposal and not the other. While the ANDX Board intends to consider the vote resulting from this proposal, the vote is advisory only and therefore not binding on ANDX. If the Merger is approved by holders of ANDX Common Units and consummated, the compensation will be payable even if the Non-Binding Compensation Advisory Proposal is not approved because such compensation is based on the terms of the Merger Agreement as well as the contractual arrangements with ANDX’s named

 

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executive officers. The delivery of the ANDX Written Consent by ANDX GP and ANDX Refining Southwest with respect to the ANDX Common Units they own will be sufficient to approve the Non-Binding Compensation Advisory Proposal, without the receipt of written consent from any other ANDX Common Unitholder.

ANDX is seeking approval of the following resolution by way of consent:

RESOLVED, that ANDX’s Common Unitholders approve, on an advisory (non-binding) basis, the compensation that may be paid or become payable to ANDX’s named executive officers in connection with the Merger, as disclosed pursuant to Item 402(t) of Regulation S-K under the heading “The Merger—Merger-Related Compensation” (which disclosure includes the compensation table and related narrative named executive officer compensation disclosures required pursuant to Item 402(t) of Regulation S-K).”

Submission of Consents

Holders of ANDX Common Units may consent to the approval and adoption of the Merger Agreement, the Merger and the Non-Binding Compensation Advisory Proposal with respect to their ANDX Common Units by completing, dating and signing the written consent furnished with this consent statement/prospectus and returning it to ANDX.

If you hold ANDX Common Units as of the Record Date and you wish to give your written consent, you must fill out the enclosed written consent, date and sign it, and promptly return it to ANDX. Once you have completed, dated and signed the written consent, you may deliver it to ANDX by faxing it to Andeavor Logistics LP, Attention: Molly R. Benson, Secretary, at (419) 421-8427, by emailing a .pdf copy of your written consent to OfficeoftheSecretary@marathonpetroleum.com or by mailing your written consent to Andeavor Logistics LP at 200 East Hardin Street, Findlay, Ohio 45840, Attention: Molly R. Benson, Secretary. If you do not return your written consent, it will have the same effect as a vote against the approval and adoption of the Merger Agreement, the transactions contemplated thereby and the Non-Binding Compensation Advisory Proposal.

If you hold ANDX Common Units in “street name” with a bank, brokerage firm or other nominee, you should follow the instructions provided by your bank, brokerage firm or other nominee.

Upon the later of 20 business days after this consent statement/prospectus is sent to ANDX Unitholders and the date on which a sufficient number of consents to approve and adopt the Merger Agreement and the transactions contemplated thereby have been received, the consent process will conclude. The delivery of the ANDX Written Consent by ANDX GP and ANDX Refining Southwest with respect to the ANDX Common Units they own will be sufficient to adopt the Merger Agreement, and thereby approve the Merger, without the receipt of written consent from any other ANDX Common Unitholder.

Revocation of Consents

Your consent may be revoked at any time before the later of (i) 20 business days after this consent statement/prospectus is sent to ANDX Unitholders and (ii) the date on which the consents of a sufficient number of holders of ANDX Common Units (the “ANDX Common Unitholders”) to approve and adopt the Merger Agreement and the transactions contemplated thereby have been delivered to the secretary of ANDX. If you wish to revoke a previously given consent before that time, you may do so by faxing such revocation to Andeavor Logistics LP, Attention: Molly R. Benson, Secretary, at (419) 421-8427, by emailing a .pdf copy of such revocation to OfficeoftheSecretary@marathonpetroleum.com or by mailing such revocation to Andeavor Logistics LP at 200 East Hardin Street, Findlay, Ohio 45840, Attention: Molly R. Benson, Secretary.

Expenses

The expense of preparing, printing and mailing these consent materials is being borne equally by MPLX and ANDX.

 

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THE MERGER

This discussion of the Merger is qualified in its entirety by reference to the Merger Agreement, which is attached to this consent statement/prospectus as Annex A and incorporated by reference herein in its entirety. You should read the entire Merger Agreement carefully as it is the legal document that governs the Merger.

Transaction Structure

At the effective time of the Merger, Merger Sub will merge with and into ANDX. As a result of the Merger, the separate existence of Merger Sub will cease, and ANDX will continue as the surviving entity and a wholly owned subsidiary of MPLX.

Consideration to ANDX Common Unitholders

As a result of the Merger, each ANDX Common Unit, other than any ANDX Common Unit held by ANDX GP and ANDX Refining Southwest, issued and outstanding immediately prior to the effective time of the Merger will be converted into 1.135 validly issued, fully paid and non-assessable (except to the extent such non-assessability may be affected by Sections 17-303, 17-607 and 17-804 of the Delaware Revised Uniform Limited Partnership Act (the “DRULPA”)) MPLX Common Units.

As a result of the Merger, each ANDX Common Unit held by ANDX GP and ANDX Refining Southwest issued and outstanding immediately prior to the effective time of the Merger (“Affiliated Unitholder Eligible Units”) will be converted into 1.0328 validly issued, fully paid and non-assessable (except to the extent such non-assessability may be affected by Sections 17-303, 17-607 and 17-804 of the DRULPA) MPLX Common Units.

Holders of ANDX Common Units will not be entitled to receive any fractional MPLX Common Units in the Merger, and no holders of Public Unitholder Eligible Units or Affiliated Unitholder Eligible Units will be entitled to distributions, voting rights or other rights in respect of any fractional MPLX Common Unit. Holders of ANDX Common Units that would otherwise have been entitled to receive a fractional MPLX Common Unit will instead be entitled to receive, in lieu of fractional units, an amount in cash, without interest, rounded to the nearest cent, equal to the product of (A) the fraction of an MPLX Common Unit (after aggregating all the fractional MPLX Common Units held by the holder at the effective time of the Merger and rounded to three decimal places) to which the holder would otherwise be entitled, and (B) an amount equal to the average of the volume weighted average price per unit of the MPLX Common Units on the NYSE (as reported by Bloomberg L.P. or, if not reported therein, in another authoritative source mutually selected by MPLX and ANDX) on each of the ten consecutive trading days ending with the complete trading day immediately prior to the effective time of the Merger.

Consideration to ANDX Series A Preferred Unitholders

As a result of the Merger, each ANDX Series A Preferred Unit issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive a validly issued, fully paid and non-assessable (except to the extent such non-assessability may be affected by Sections 17-303, 17-607 and 17-804 of the DRULPA) MPLX Series B Preferred Unit. By virtue of the conversion, each ANDX Series A Preferred Unit will be cancelled and cease to exist as of the effective time of the Merger.

Consideration to ANDX TexNew Mex Unitholders and ANDX Special Limited Partner Interest

As a result of the Merger, each ANDX TexNew Mex Unit issued and outstanding immediately prior to the effective time of the Merger will be converted into a validly issued, fully paid and non-assessable (except to the extent such non-assessability may be affected by Sections 17-303, 17-607 and 17-804 of the DRULPA) MPLX

 

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TexNew Mex Unit representing a limited partner interest in MPLX. By virtue of the conversion, all ANDX TexNew Mex Units will be cancelled and cease to exist as of the effective time of the Merger. The MPLX TexNew Mex Units are a new class of units in MPLX with substantially equivalent rights, powers, duties and obligations as the TexNew Mex Units.

As a result of the Merger, the ANDX Special Limited Partner Interest outstanding immediately prior to the effective time of the Merger will be converted into the MPLX Special Limited Partner Interest and the ANDX Special Limited Partner Interest shall be deemed to be cancelled and shall cease to exist as of the effective time of the Merger.

Background of the Merger

On October 1, 2018, MPC completed its acquisition of Andeavor, pursuant to the Agreement and Plan of Merger, dated as of April 29, 2018 (as amended, the “Andeavor Merger Agreement”), by and among Andeavor, MPC, Mahi Inc., a Delaware corporation and a wholly owned subsidiary of MPC, and Andeavor LLC (f/k/a Mahi LLC), a Delaware limited liability company and a wholly owned subsidiary of MPC. As a result of this transaction and Andeavor becoming a direct wholly owned subsidiary of MPC, MPC obtained the ability to control ANDX through its indirect ownership of the ANDX GP. In addition, as a result of this transaction, MPC acquired beneficial ownership of ANDX Common Units owned at the time by Andeavor and its subsidiaries, representing approximately 64% of the outstanding ANDX Common Units.

In its earnings release issued on November 1, 2018, MPC stated its plans to engage advisors and begin the process of assessing all options for MPLX and ANDX, which could include MPLX acquiring ANDX and ANDX acquiring MPLX.

On November 5, 2018, MPC filed with the SEC amendments to its Schedules 13D relating to both ANDX and MPLX with updated information regarding the assessment of such options.

On November 26, 2018, at the request of Sigmund Cornelius, chairman of the ANDX Conflicts Committee, a representative of Sidley Austin LLP (“Sidley”) contacted representatives of MPC to determine whether Sidley had any potential conflicts that would prevent it from serving as legal advisor to the ANDX Conflicts Committee in connection with the consideration, negotiation and, if appropriate, approval of a potential transaction with MPLX.

On December 3, 2018, the ANDX Conflicts Committee engaged Sidley as its legal advisor in connection with a potential transaction with MPLX. An engagement letter between the ANDX Conflicts Committee and Sidley relating to the same was subsequently executed effective as of such date.

On December 6, 2018, the ANDX Conflicts Committee held separate in-person meetings, also attended by a representative of Sidley, to interview four potential financial advisors. During these interviews, the ANDX Conflicts Committee discussed each financial advisor’s knowledge of precedent simplification and related-party master limited partnership (“MLP”) transactions, experience with conflicts committee assignments (including MLP conflicts committees), prior relationships with MPC, MPLX and ANDX, and proposed fees for its work. Goldman Sachs also delivered to the ANDX Conflicts Committee a relationships disclosure letter. Following the last interview, the ANDX Conflicts Committee held a meeting along with the representative of Sidley, at which meeting the ANDX Conflicts Committee members discussed the interviews, the relative strengths and weaknesses of each of the potential financial advisors, their independence, and their proposed fees. The ANDX Conflicts Committee unanimously agreed to select Goldman Sachs as its financial advisor, subject to negotiation of an acceptable fee and engagement letter with Goldman Sachs. The ANDX Conflicts Committee determined to wait to notify Goldman Sachs until the committee received final information from one of the other prospective financial advisors.

 

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On December 8, 2018, Goldman Sachs delivered a draft engagement letter to the ANDX Conflicts Committee. The ANDX Conflicts Committee and representatives of Sidley engaged in negotiations with Goldman Sachs regarding the engagement letter until December 27, 2018, on which date Goldman Sachs delivered an executed engagement letter that was subsequently executed by the ANDX Conflicts Committee and ANDX. Under the terms of the engagement letter, Goldman Sachs was not entitled to an initial fee unless and until a proposal relating to a transaction was received by the ANDX Conflicts Committee.

On December 17, 2018, at the request of Christopher Helms, chairman of the conflicts committee of the board of directors of MPLX GP (the “MPLX Conflicts Committee”), representatives of MPC contacted Latham & Watkins LLP (“Latham & Watkins”) to determine whether Latham & Watkins had any potential conflicts that would prevent Latham & Watkins from serving as legal advisor to the MPLX Conflicts Committee in connection with the consideration, negotiation and, if appropriate, approval of a potential transaction with ANDX. On December 19, 2018, Michael Beatty, a member of the MPLX Conflicts Committee, contacted a representative of Latham & Watkins regarding the engagement of Latham & Watkins as legal advisor to the MPLX Conflicts Committee.

Also in December 2018, the MPLX Conflicts Committee contacted Jefferies LLC (“Jefferies”) regarding potential service as financial advisor to the MPLX Conflicts Committee in connection with the consideration, negotiation and, if appropriate, approval of a potential transaction with ANDX.

On January 7, 2019, Mr. Beatty again contacted a representative of Latham & Watkins regarding the engagement of Latham & Watkins as legal advisor to the MPLX Conflicts Committee.

On January 9, 2019, the MPLX Conflicts Committee held a telephonic meeting with representatives of Jefferies and Latham & Watkins. During this meeting, representatives of Jefferies and Latham & Watkins provided an overview of their respective qualifications and experience advising MLPs and other companies with respect to transactions similar to the proposed transaction with ANDX. Latham & Watkins also provided an overview of its prior relationships with MPC, MPLX and ANDX. After discussion, the MPLX Conflicts Committee unanimously determined to engage Jefferies and Latham & Watkins as financial advisor and legal counsel, respectively, to the MPLX Conflicts Committee.

On January 17, 2019, Sidley and Latham & Watkins delivered a joint legal due diligence request list to MPC, MPLX and ANDX.

On January 25, 2019, the MPLX Conflicts Committee held a telephonic meeting with representatives of Jefferies and Latham & Watkins. During this meeting, Latham & Watkins reviewed with the MPLX Conflicts Committee the responsibilities of the MPLX Conflicts Committee members in connection with their consideration of a potential transaction under Delaware law and pursuant to the MPLX Partnership Agreement, including with respect to resolving conflicts of interests in accordance with the MPLX Partnership Agreement. Jefferies and Latham & Watkins each also reviewed with the MPLX Conflicts Committee the status of their respective due diligence reviews of ANDX to date.

On January 30, 2019, representatives of Sidley and Latham & Watkins held a telephonic meeting with MPC in-house legal representatives to discuss the due diligence request and the parties’ planned due diligence reviews of ANDX and MPLX, including virtual data room requirements and process-related responses.

On February 13, 2019, Sidley delivered a memorandum regarding duties of directors under Delaware law and pursuant to the ANDX Partnership Agreement to the ANDX Conflicts Committee in anticipation of a due diligence session and further meetings.

On February 13, 2019, the MPLX Conflicts Committee held a telephonic meeting with representatives of Jefferies and Latham & Watkins to discuss upcoming management presentations with representatives of MPC, ANDX and MPLX.

 

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On February 14, 2019, Latham & Watkins hosted a diligence and management presentation session in Houston, Texas, with representatives of MPC management, ANDX management and MPLX management, including Michael Hennigan, in his capacity as the President of MPLX GP, Pamela Beall, in her capacity as the Executive Vice President and Chief Financial Officer of MPLX GP, Don Sorensen, President of ANDX GP, Andrew Woodward, former Vice President, Finance of ANDX GP, and Timothy Griffith, in his capacity as the Senior Vice President and Chief Financial Officer of MPC; the ANDX Conflicts Committee; the MPLX Conflicts Committee, with Dan Sandman joining by telephone; Goldman Sachs; Barclays plc (“Barclays”), MPC’s financial advisor in connection with strategic alternatives for MPLX and ANDX; Jefferies; Sidley; and Latham & Watkins in attendance. At the management presentation, members of management of each of MPC, ANDX and MPLX discussed with the conflicts committees and their advisors the strategic rationale for a potential transaction as well as current business plans for each of ANDX and MPLX, including certain unaudited forecasted financial information regarding the applicable entities and their respective assets.

Following the management presentations, the ANDX Conflicts Committee members in attendance met with representatives from Goldman Sachs and Sidley to discuss the presentations and related matters, and the MPLX Conflicts Committee met with Mr. Hennigan, in his capacity as the President of MPLX GP, and Ms. Beall, in her capacity as the Executive Vice President and Chief Financial Officer of MPLX GP, to discuss the presentations and related matters, including certain considerations with respect to a potential transaction such as MPLX’s estimates of expected required capital expenditures pertaining to ANDX’s assets based on a report prepared by MPC regarding such capital expenditures (the “MPC CapEx Report”). Mr. Hennigan offered to send the MPC CapEx Report to the MPLX Conflicts Committee for review. Mr. Hennigan and Ms. Beall then left the meeting. Thereafter, the MPLX Conflicts Committee, with Mr. Sandman participating by telephone, held a meeting with representatives of Jefferies and Latham & Watkins to discuss the management presentations and related matters, as well as the overall transaction timeline and due diligence process.

On February 15, 2019, Jefferies delivered to the MPLX Conflicts Committee a relationships disclosure letter.

On February 19, 2019, at a meeting of the board of directors of MPLX GP (the “MPLX Board”), the MPLX Board adopted resolutions delegating to the MPLX Conflicts Committee the full power, authority and responsibilities of the MPLX Board to the extent necessary to (i) develop, in conjunction with the full MPLX Board, a proposal to ANDX regarding a potential transaction or series of related transactions pursuant to which MPLX or one of its affiliates would directly or indirectly acquire all of the outstanding partnership interests of ANDX, (ii) review and evaluate any potential conflicts arising in connection with the proposal and the proposed transaction and related arrangements, (iii) review and evaluate the terms and conditions of the proposal and the proposed transaction and related arrangements on behalf of MPLX and the holders of limited partner interests in MPLX (other than MPLX GP and its affiliates, including MPC) (the “MPLX Public Unitholders”), (iv) negotiate on behalf of MPLX the terms and conditions of the proposed transaction and related arrangements, (v) determine whether the proposed transaction and related arrangements are not adverse to the best interests of MPLX and its subsidiaries treated as a single consolidated entity and the MPLX Public Unitholders, and (vi) determine whether to approve or not approve, and to recommend that the MPLX Board approve or not approve, as applicable, the proposed transaction and related arrangements, with any such approval and related recommendation of the MPLX Conflicts Committee constituting “Special Approval” for all purposes under the MPLX Partnership Agreement, including but not limited to Section 7.9 thereof.

Also at the February 19, 2019 MPLX Board meeting, the MPLX Board reviewed a presentation (the “February 19 Presentation”) containing a summary of proposed terms of a potential acquisition by MPLX of all outstanding ANDX Common Units that had been provided to the MPLX Board by representatives of MPC. The February 19 Presentation outlined a unit-for-unit exchange at an exchange ratio of 1.042 MPLX Common Units for each ANDX Common Unit, including the key assumptions and projections underlying the proposed terms of such acquisition.

 

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On February 20, 2019, the MPLX Conflicts Committee held a telephonic meeting with representatives of Jefferies and Latham & Watkins to discuss the terms of the proposed transaction contained in the February 19 Presentation, including the key assumptions and projections related thereto. Representatives of Latham & Watkins also reviewed with the MPLX Conflicts Committee the status of Latham & Watkins’ legal due diligence review of ANDX.

On February 25, 2019, Mr. Hennigan sent a copy of the MPC CapEx Report to representatives of Latham & Watkins in response to a follow-up request by representatives of Latham & Watkins.

On February 27, 2019, the MPLX Conflicts Committee held a telephonic meeting with representatives of Jefferies and Latham & Watkins to further discuss the terms of the proposed transaction contained in the February 19 Presentation. Jefferies reviewed with the MPLX Conflicts Committee its preliminary financial analysis of the terms of the proposed transaction contained in the February 19 Presentation and provided an overview of comparable precedent transactions.

On March 1, 2019, the MPLX Conflicts Committee held a telephonic meeting (the “March 1 Meeting”) with Mr. Hennigan and Ms. Beall to discuss considerations related to a potential merger transaction between MPLX and ANDX. At the March 1 Meeting, Mr. Hennigan and Ms. Beall discussed with the MPLX Conflicts Committee certain of Mr. Hennigan’s and Ms. Beall’s observations regarding the valuation of ANDX and the potential terms of the transaction as outlined in the February 19 Presentation.

Later that day, the MPLX Conflicts Committee held a telephonic meeting with representatives of Jefferies and Latham & Watkins to further discuss the March 1 Meeting. Representatives of Jefferies discussed Jefferies’ preliminary analysis of the proposed transaction. Representatives of Jefferies, among other things, (i) summarized the transaction and provided background on each of MPLX and ANDX and their respective businesses, (ii) reviewed the proposed exchange ratio of 1.042 contained in the February 19 Presentation in the context of an implied multiples analysis, (iii) discussed summary market data for the MPLX Common Units and the ANDX Common Units, along with implied multiples with respect thereto relating to, among other things, total equity value, EBITDA and distributable cash flow, and (iv) described the implied premiums to pricing sensitivity analysis undertaken by Jefferies. The MPLX Conflicts Committee then discussed with representatives of Jefferies and Latham & Watkins the strategic considerations involved in providing an initial proposal to ANDX with respect to a potential transaction, as well as the overall transaction negotiations and execution process. Jefferies and Latham & Watkins also provided updates with respect to their respective due diligence reviews of ANDX.

On March 13, 2019, the MPLX Conflicts Committee held a telephonic meeting with representatives of Jefferies and Latham & Watkins. Representatives of Jefferies further discussed Jefferies’ preliminary analysis of the proposed transaction. The MPLX Conflicts Committee then discussed with representatives of Jefferies and Latham & Watkins additional strategic considerations involved in providing an initial proposal to ANDX with respect to a potential transaction. Jefferies and Latham & Watkins also provided updates with respect to their respective due diligence reviews of ANDX. Following the meeting, at the direction of the MPLX Conflicts Committee, Latham & Watkins provided a draft of an initial offer letter proposing a unit-for-unit exchange at an exchange ratio of 1.02 MPLX Common Units for each ANDX Common Unit for the MPLX Conflicts Committee’s review.

On March 14, 2019, the MPLX Conflicts Committee held a telephonic meeting with representatives of Jefferies and Latham & Watkins to review the draft offer letter and other economic and strategic considerations related to making an initial offer. Following this discussion, the MPLX Conflicts Committee unanimously determined to send the offer letter the following day to the ANDX Conflicts Committee, including a proposed exchange ratio for the potential merger transaction of 1.02 MPLX Common Units for each ANDX Common Unit.

 

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On March 15, 2019, Mr. Helms, as chairman of the MPLX Conflicts Committee, delivered to Gary Heminger, in his capacity as the chairman and chief executive officer of ANDX GP, a letter dated March 15, 2019 (the “March 15 Letter”) and addressed to the ANDX Conflicts Committee containing the MPLX Conflicts Committee’s proposal for a strategic transaction between MPLX and ANDX. The proposal provided for the acquisition of ANDX by MPLX at an exchange ratio of 1.02 MPLX Common Units for each outstanding ANDX Common Unit (the “Initial MPLX Offer”). The March 15 Letter further noted that the MPLX Conflicts Committee would appreciate an opportunity to present its proposal in more detail to the ANDX Conflicts Committee and its advisors as soon as possible.

On March 18, 2019, Mr. Heminger forwarded the March 15 Letter to the ANDX Board, along with a letter dated March 18, 2019, from Mr. Heminger, in his capacity as chairman and chief executive officer of the ANDX Board, to Mr. Cornelius as chairman of the ANDX Conflicts Committee. In his letter, Mr. Heminger requested that the ANDX Conflicts Committee proceed with a review and evaluation of the Initial MPLX Offer pursuant to Section 7.9 of the ANDX Partnership Agreement (i.e., as a “Special Approval”), with an understanding that the ANDX Board would ultimately make any determination whether to approve or not approve any combination of ANDX and MPLX. Mr. Heminger further noted in the letter that the ANDX Board had previously authorized the ANDX Conflicts Committee to engage Goldman Sachs and Sidley as its financial and legal advisors, respectively, and that it was the intention of the ANDX Board for the ANDX Conflicts Committee to engage with the MPLX Conflicts Committee in an evaluation of a possible combination of the two partnerships.

On March 19, 2019, the ANDX Conflicts Committee held a telephonic meeting with representatives of Goldman Sachs and Sidley. The representatives of Goldman Sachs provided an overview of the Initial MPLX Offer and discussed certain financial aspects of the Initial MPLX Offer with the ANDX Conflicts Committee. The ANDX Conflicts Committee discussed the Initial MPLX Offer and further process matters in connection with the same.

Also on March 19, 2019, representatives of Jefferies contacted representatives of Goldman Sachs and offered to meet in order to discuss the MPLX Conflicts Committee’s reasons for the exchange ratio proposed in the Initial MPLX Offer. Representatives of Goldman Sachs indicated that Goldman Sachs would respond to Jefferies’ request at a future time.

On March 21, 2019, the MPLX Conflicts Committee held a telephonic meeting with representatives of Jefferies and Latham & Watkins to discuss the transaction and steps to be taken while awaiting ANDX’s response to the Initial MPLX Offer. Representatives of Jefferies described Jefferies’ March 19 discussion with Goldman Sachs. Jefferies and Latham & Watkins also provided updates with respect to their respective due diligence reviews of ANDX.

On March 27, 2019, Jones Day, counsel to MPC, provided Latham & Watkins with an initial draft of the Merger Agreement and proposed transaction timeline.

On April 1, 2019, the MPLX Conflicts Committee held a telephonic meeting with representatives of Jefferies and Latham & Watkins. Representatives of Latham & Watkins reviewed with the MPLX Conflicts Committee the terms of the initial draft Merger Agreement that Jones Day had provided to Latham & Watkins. The MPLX Conflicts Committee determined that, while the committee had not received a response from the ANDX Conflicts Committee to the Initial MPLX Offer, the committee and Latham & Watkins should provide comments to the Merger Agreement in order to be constructive and make progress on the transaction. Representatives of Latham & Watkins also reviewed with the MPLX Conflicts Committee the status of Latham & Watkins’ legal due diligence review of ANDX and the proposed timeline provided by Jones Day.

On April 2, 2019, the ANDX Conflicts Committee held a meeting in person at the offices of Goldman Sachs, with James Lamanna joining by telephone, along with representatives of Goldman Sachs and Sidley. At the meeting, representatives of Goldman Sachs discussed with the ANDX Conflicts Committee Goldman Sachs’

 

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preliminary financial analysis of the financial terms of the Initial MPLX Offer. The ANDX Conflicts Committee then discussed the Initial MPLX Offer and strategies it might pursue with respect to next steps. Based on the ANDX Conflicts Committee’s evaluation of the Initial MPLX Offer, and after consultation with representatives of Goldman Sachs and Sidley, the ANDX Conflicts Committee determined to reject the Initial MPLX Offer, and further concluded that the Initial MPLX Offer did not serve as a basis for any further negotiation (the “Initial ANDX Response”).

Also on April 2, 2019, at the direction of the MPLX Conflicts Committee, Latham & Watkins provided Jones Day with a revised draft of the Merger Agreement, including revisions to, among other things, certain representations, warranties, interim covenants and termination rights of the parties.

On that same day, the ANDX Board adopted a resolution by written consent delegating to the ANDX Conflicts Committee, the power and authority to: (i) review and evaluate the terms and conditions of, and to determine the advisability of, the Initial MPLX Offer and any alternative transaction thereto with MPLX on behalf of ANDX and the ANDX Common Unitholders excluding ANDX GP and ANDX Refining Southwest (the “ANDX Public Unitholders”); (ii) negotiate, or delegate to any person or persons the ability to negotiate, with MPLX and its representatives, or any other appropriate person, with respect to the terms and conditions of the Proposed Transaction (including any ancillary agreements with MPC); (iii) determine whether or not to approve the Proposed Transaction by “Special Approval” (pursuant to Section 7.9(a) of the ANDX Partnership Agreement); and (iv) make any recommendations to the ANDX Board regarding the proposed transaction as the ANDX Conflicts Committee shall determine to be appropriate.

On April 3, 2019, Mr. Cornelius, acting on behalf of the ANDX Conflicts Committee, delivered a letter (the “April 3 Letter”) to Mr. Helms stating the Initial ANDX Response. The April 3 Letter further indicated that the ANDX Conflicts Committee would be willing to review, evaluate and potentially negotiate a revised proposal by the MPLX Conflicts Committee, but that the ANDX Conflicts Committee did not believe a presentation by the MPLX Conflicts Committee and its advisors regarding the Initial MPLX Offer would be productive at that time.

Later that day, the MPLX Conflicts Committee held a telephonic meeting with representatives of Jefferies and Latham & Watkins to discuss the April 3 Letter and a potential response thereto. Following this discussion, the MPLX Conflicts Committee decided to advise MPC that, based on the April 3 Letter, it appeared that discussions with ANDX may have reached an impasse and that the MPLX Conflicts Committee would not negotiate against itself by submitting a revised offer to the ANDX Conflicts Committee. Representatives of Latham & Watkins then reviewed with the MPLX Conflicts Committee additional revisions to the Merger Agreement, including revisions to limit ANDX’s ability to amend existing related-party agreements with MPC after the signing of the Merger Agreement. Following the meeting, at the direction of the MPLX Conflicts Committee, Latham & Watkins provided Jones Day with a further revised draft of the Merger Agreement containing the revisions discussed with the MPLX Conflicts Committee.

On April 5, 2019, representatives of Barclays, at the direction of MPC, contacted representatives of Jefferies and asked Jefferies to contact Goldman Sachs in order to obtain an understanding of why the ANDX Conflicts Committee concluded that the Initial MPLX Offer did not serve as a basis for further negotiation.

Later that same day, the MPLX Conflicts Committee held a telephonic meeting with representatives of Jefferies and Latham & Watkins to discuss Barclays’ request for Jefferies to contact Goldman Sachs. Following discussion, the MPLX Conflicts Committee authorized Jefferies to contact Goldman Sachs and offer to discuss the MPLX Conflicts Committee’s reasons for the exchange ratio reflected in the Initial MPLX Offer.

On April 7, 2019, representatives of Jefferies spoke by phone with representatives of Goldman Sachs and explained to Goldman Sachs that the MPLX Conflicts Committee did not plan to provide a revised offer.

Later that same day, representatives of Jefferies contacted representatives of Goldman Sachs in order to discuss the Initial MPLX Offer and the Initial ANDX Response. Goldman Sachs responded that the ANDX

 

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Conflicts Committee did not view the Initial MPLX Offer as a valid starting point for discussions and that the ANDX Conflicts Committee had determined not to pursue a potential transaction on those terms. Representatives of Jefferies subsequently contacted representatives of Barclays and relayed the substance of Jefferies’ discussions with Goldman Sachs.

On April 8, 2019, Mr. Heminger, acting on behalf of MPC, spoke by phone with Mr. Cornelius. Mr. Heminger explained that he was looking for a way to advance the discussions and encouraged the ANDX Conflicts Committee to make a proposal. Mr. Cornelius informed Mr. Heminger that the ANDX Conflicts Committee was scheduled to meet on April 10, 2019 and that he would reach out to Mr. Heminger after the meeting.

Also on April 8, 2019, representatives of Barclays, at the direction of MPC, contacted representatives of Jefferies and Goldman Sachs and proposed that the parties’ respective financial advisors meet in person the following week.

Later that same day, the MPLX Conflicts Committee held a telephonic meeting with representatives of Jefferies and Latham & Watkins to discuss Jefferies’ conversations with Goldman Sachs and Barclays, as well as the merits of the proposed meeting of the parties’ financial advisors. Following discussion, the MPLX Conflicts Committee authorized Jefferies to participate in the meeting and share with Barclays and Goldman Sachs certain aspects of Jefferies’ financial analysis of the proposed business combination.

On April 9, 2019, representatives of MPC held a telephonic conversation with representatives of Latham & Watkins during which Latham & Watkins discussed with such representatives the general status of negotiations among the parties.

On April 10, 2019, the ANDX Conflicts Committee held a telephonic meeting with representatives of Goldman Sachs and Sidley to discuss whether or not to make a counterproposal to the Initial MPLX Offer. Representatives of Goldman Sachs updated the ANDX Conflicts Committee on its previous discussions with representatives of Jefferies regarding the Initial ANDX Response. Mr. Cornelius advised the ANDX Conflicts Committee on his discussions with Mr. Heminger, explaining that Mr. Heminger had expressed his hope that the parties could advance negotiations even in light of the Initial ANDX Response. The ANDX Conflicts Committee engaged in discussions with Goldman Sachs and Sidley regarding whether or not to make a counterproposal and requested that Goldman Sachs reach out to Jefferies and Barclays to attempt to break through the impasse.

Later on April 10, 2019, Mr. Cornelius spoke with Mr. Heminger. Mr. Cornelius stated the ANDX Conflicts Committee agreed with MPC’s proposal for representatives of Goldman Sachs, Jefferies and Barclays to meet.

On April 11, 2019, the MPLX Conflicts Committee held a telephonic meeting with representatives of Jefferies and Latham & Watkins to discuss the proposed meeting of the parties’ financial advisors. Representatives of Jefferies reviewed with the MPLX Conflicts Committee certain information that Jefferies intended to share with Barclays and Goldman Sachs. Latham & Watkins then provided the MPLX Conflicts Committee with a description of Latham & Watkins’ April 9 telephonic conversation with representatives of MPC.

On April 15, 2019, representatives of Goldman Sachs, Jefferies and Barclays met in New York City and discussed the assumptions being utilized by Goldman Sachs and Jefferies for their respective financial analyses. The representatives of Goldman Sachs, Jefferies and Barclays also discussed the financial impact of those assumptions on their respective financial analyses of illustrative exchange ratios for a potential transaction.

Later that same day, representatives of Jefferies held a telephonic conversation with Mr. Heminger acting on behalf of MPC, and Mr. Hennigan, acting on behalf of MPLX GP, in which Jefferies discussed the general status of negotiations among the parties and suggested that either the ANDX Conflicts Committee propose a counteroffer or that MPC make an alternative proposal to both committees.

 

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On April 16, 2019, the ANDX Conflicts Committee held a telephonic meeting with representatives of Goldman Sachs and Sidley. At the meeting, representatives of Goldman Sachs provided an update on their discussions with representatives of Barclays and Jefferies, including a summary of the perspectives of Jefferies and MPLX management as to the future financial performance of the companies, and Jefferies’ representation that the MPLX Conflicts Committee would not be making another offer. The ANDX Conflicts Committee discussed next steps in developing a potential counteroffer, and requested that Goldman Sachs provide further analysis on potential exchange ratios.

Later that same day, Mr. Heminger contacted Mr. Cornelius to schedule a call. Mr. Cornelius informed Mr. Heminger that the ANDX Conflicts Committee had received a debrief from the three financial advisors’ meeting and that the ANDX Conflicts Committee was developing a counteroffer.

On April 17, 2019, the MPLX Conflicts Committee held a telephonic meeting with representatives of Jefferies and Latham & Watkins at which representatives of Jefferies provided a summary of the meeting of the parties’ respective financial advisors held on April 15, 2019. The MPLX Conflicts Committee discussed whether to propose that MPC offer some form of sponsor support in order to resolve the potential impasse between the parties.

Later that same day, the ANDX Conflicts Committee held a telephonic meeting with representatives of Goldman Sachs and Sidley to continue discussing a potential counteroffer. Representatives of Goldman Sachs discussed the ANDX and MPLX management forecasts and ANDX and MPLX street estimates, the estimates and forecasts of securities analysts covering ANDX and MPLX, as well as an updated preliminary financial analysis of a potential transaction. At that meeting, the ANDX Conflicts Committee authorized Mr. Cornelius to make a counteroffer of 1.35 MPLX Common Units for each outstanding ANDX Common Unit (the “Second ANDX Response”). Thereafter, Mr. Cornelius delivered a letter setting forth the Second ANDX Response to Mr. Helms.

On April 18, 2019, the MPLX Conflicts Committee held a telephonic meeting with representatives of Jefferies and Latham & Watkins to discuss the Second ANDX Response. Representatives of Jefferies discussed Jefferies’ analysis of the proposed exchange ratio in the Second ANDX Response. The MPLX Conflicts Committee discussed with representatives of Jefferies and Latham & Watkins whether to respond to the Second ANDX Response. Following discussion, the MPLX Conflicts Committee decided to consider responding to the Second ANDX Response with an increased exchange ratio, and Latham & Watkins provided a draft counteroffer letter to the MPLX Conflicts Committee for review.

Also on April 18, 2019, at the direction of the MPLX Conflicts Committee, representatives of Jefferies discussed the transaction and the MPLX Conflicts Committee’s proposed counteroffer with representatives of Barclays, and Barclays, on behalf of MPC, requested that the MPLX Conflicts Committee refrain from sending the counteroffer letter to ANDX until Mr. Heminger spoke to Mr. Cornelius.

Later that same day, Mr. Heminger, acting on behalf of MPC, and Mr. Cornelius spoke by phone. Mr. Heminger thanked Mr. Cornelius for sending the Second ANDX Response, but also expressed his concern with its content and asked for the ANDX Conflicts Committee’s rationale for its offer. Mr. Cornelius stated that the Initial MPLX Offer was substantially below market, was inconsistent with precedent transactions, ignored the historical valuation relationship between the entities and did not represent a constructive starting point for negotiations. However, in the interest of finding a path forward, Mr. Cornelius noted that the ANDX Conflicts Committee was willing to communicate the Second ANDX Response. Mr. Cornelius noted such proposal was supported by longer-term historical related values between the two securities, and that it would enable the pro forma company to pay the current MPLX distribution while maintaining an approximate 1.4x coverage ratio. Mr. Cornelius also cited the ANDX Conflicts Committee’s belief that the proposed transaction would be slightly accretive to ANDX and roughly breakeven for MPLX and MPC. Mr. Heminger stated his view that the proposal would represent a dilutive transaction to MPLX on a DCF-per-unit basis.

 

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Mr. Cornelius suggested that the financial advisors speak again to understand differences in calculations, and they agreed that Mr. Heminger, acting on behalf of MPC, should request that Barclays and Jefferies contact Goldman Sachs to discuss this further.

Also later that day, representatives of Barclays, Jefferies and Goldman Sachs held a telephonic meeting to further discuss the respective financial analysis methodologies of each financial advisor.

On April 19, 2019, Mr. Heminger, acting on behalf of MPC, and Mr. Cornelius corresponded regarding the different analytical approaches being discussed and used by the respective financial advisors to the ANDX Conflicts Committee and the MPLX Conflicts Committee and by Barclays, as financial advisor to MPC, including analysis regarding “distributable cash flow” and “discounted cash flow” metrics and their prior discussions regarding the “dueling DCFs” in certain earlier communications, along with assumptions being used in the financial analyses to assess the financial impact of illustrative exchange ratios for a potential transaction.

On April 20, 2019, Mr. Heminger, acting on behalf of MPC, and Mr. Cornelius spoke again by phone. Mr. Heminger agreed to look at comparisons based on management forecasts, with no adjustments, and for MPC to work on an offer to the ANDX Conflicts Committee in support of the transaction, noting his understanding that MPC support in the form of a different exchange ratio would likely be required to get a deal done. Mr. Heminger also noted that MPC considered the accretion/dilution to remain much more favorable to ANDX in 2019 and later years, and stated that he could not support a transaction even at a 1.15x exchange ratio, particularly due to the DCF-per-unit dilution for MPLX in years 2020 and beyond. Mr. Cornelius said he would wait for MPLX’s next offer and respond accordingly.

Also on April 20, 2019, Mr. Heminger, acting on behalf of MPC, contacted Mr. Helms and discussed the transaction, including the financial analysis methodologies discussed between MPC and Barclays. Mr. Heminger informed Mr. Helms of his belief that an exchange ratio of 1.06 MPLX Common Units for each outstanding ANDX Common Unit could be sufficient to reach an agreement among the parties.

Later that same day, the MPLX Conflicts Committee held a telephonic meeting with representatives of Jefferies and Latham & Watkins to discuss the proposed counteroffer letter drafted by Latham & Watkins. Representatives of Jefferies provided the MPLX Conflicts Committee with a description of its April 18 conversations with Barclays and Goldman Sachs, and Mr. Helms provided the committee with a description of his earlier conversation with Mr. Heminger, including Mr. Heminger’s belief that a 1.06x exchange ratio could be sufficient to reach an agreement on the transaction. Jefferies provided the committee with its analysis of a proposed exchange ratio of 1.06 MPLX Common Units for each outstanding ANDX Common Unit. Following discussion, the MPLX Conflicts Committee determined to respond to the Second ANDX Response by sending the ANDX Conflicts Committee the counteroffer letter proposing an all-unit transaction with an exchange ratio of 1.06 MPLX Common Units for each outstanding ANDX Common Unit, representing a 1.7% premium based on the closing prices of the ANDX Common Units and the MPLX Common Units on April 18, 2019 (the “Second MPLX Offer”). The MPLX Conflicts Committee also discussed that MPC could offer some form of subsidy in order to support a higher exchange ratio to the ANDX Public Unitholders by agreeing to receive a lower exchange ratio for ANDX Common Units held by affiliates of MPC. Later that same day, Mr. Helms, on behalf of the MPLX Conflicts Committee, delivered the Second MPLX Offer to Mr. Cornelius.

On April 22, 2019, the ANDX Conflicts Committee held a telephonic meeting with representatives of Goldman Sachs and Sidley. Representatives of Goldman Sachs discussed with the committee members preliminary financial analyses of the Second MPLX Offer. After discussion, the ANDX Conflicts Committee approved sending a counteroffer with an exchange ratio of 1.30 MPLX Common Units for each outstanding ANDX Common Unit (the “Third ANDX Response”). Later that same day, Mr. Cornelius, on behalf of the ANDX Conflicts Committee, delivered the Third ANDX Response to Mr. Helms.

 

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Also on April 22, 2019, Mr. Heminger, acting on behalf of MPC, spoke by phone with Mr. Cornelius. Mr. Heminger stated that he wanted to understand the logic for the Third ANDX Response, believing that it was dilutive on a DCF-per-unit basis to MPLX. Mr. Cornelius stated that the Second MPLX Offer was dilutive to ANDX and represented a below-market transaction. Additionally, Mr. Cornelius explained the ANDX Conflicts Committee believed that the ANDX Common Unit price reflected ANDX management’s public commentary regarding its financial policies. Mr. Cornelius highlighted that the ANDX Conflicts Committee believed the Second MPLX Offer fell short on a number of metrics important in the evaluation of a transaction, including: (i) the Second MPLX Offer would be value dilutive to ANDX using a discounted cash flow valuation and dilutive based on a distributable cash flow analysis; (ii) management’s forecasts for MPLX were substantially more bullish than analyst estimates and, based on analyst estimates for both ANDX and MPLX, the Second MPLX Offer was even more value destructive and dilutive to ANDX; and (iii) as the Second MPLX Offer represented an at or below market offer, the premium implied by the Second MPLX Offer would be among the lowest in precedent transactions.

Later that same day, Mr. Heminger and Mr. Cornelius spoke again by phone. Mr. Heminger, acting on behalf of MPC, proposed a merger transaction in which the ANDX Public Unitholders would receive 1.10 MPLX Common Units for each of their ANDX Common Units, while MPC’s affiliates would receive an “at market” exchange ratio for the ANDX Common Units held by such affiliates (the “Initial MPC Proposal”). Mr. Heminger noted that the Initial MPC Proposal would provide a premium to the ANDX Public Unitholders and be marginally accretive to both ANDX and MPLX, and stated that he did not contemplate MPC providing any additional financial support to facilitate a transaction. Mr. Cornelius noted that he would communicate the Initial MPC Proposal to the ANDX Conflicts Committee.

On April 23, 2019, the ANDX Board held a regularly scheduled meeting in Findlay, Ohio. Discussion of approval for the regular quarterly distribution by ANDX was tabled at that time.

On April 24, 2019, the MPLX Conflicts Committee held a telephonic meeting with representatives of Jefferies and Latham & Watkins to discuss the Third ANDX Response. In light of the exchange ratio proposed by the ANDX Conflicts Committee in the Third ANDX Response, the MPLX Conflicts Committee discussed with representatives of Jefferies and Latham & Watkins possible alternative transactions for the acquisition of ANDX by MPLX. The MPLX Conflicts Committee directed Latham & Watkins to discuss potential alternative transactions with representatives of MPC and MPLX and to report back to the MPLX Conflicts Committee.

Also on April 24, 2019, the ANDX Conflicts Committee held a telephonic meeting with representatives of Goldman Sachs and Sidley. Representatives of Goldman Sachs discussed preliminary financial analyses of the Initial MPC Proposal. After discussions with representatives of Goldman Sachs and Sidley, the ANDX Conflicts Committee authorized Mr. Cornelius to make a counteroffer to MPC with a 1.20x exchange ratio for the ANDX Public Unitholders and a 1.04x exchange ratio for the ANDX Common Units held by MPC’s affiliates (the “April 24 ANDX Response”).

Later that same day, Mr. Cornelius and Mr. Heminger, acting on behalf of MPC, spoke by phone, with Mr. Griffith in the room with Mr. Heminger. Mr. Cornelius presented the April 24 ANDX Response to Mr. Heminger. Mr. Heminger expressed his disappointment with the counteroffer. Mr. Heminger reiterated that he did not contemplate MPC providing any additional financial support to facilitate a transaction. Mr. Cornelius reviewed various talking points several times regarding the items that he had discussed with Mr. Heminger on April 22, 2019 in connection with the Third ANDX Response. Mr. Heminger stated that he was going to advise the MPC board of directors (the “MPC Board”) and the MPLX GP Board of the April 24 ANDX Response.

Later that same day, the MPLX Conflicts Committee met with Mr. Heminger, Mr. Griffith and other representatives of MPC to discuss the exchange ratio proposed by the ANDX Conflicts Committee in the Third ANDX Response. Mr. Heminger asked whether the MPLX Conflicts Committee would be willing to offer up to 1.07 MPLX Common Units for each outstanding ANDX Common Unit in support of a potential merger

 

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transaction with ANDX. After meeting privately to discuss Mr. Heminger’s inquiry, the MPLX Conflicts Committee indicated to Mr. Heminger that the MPLX Conflicts Committee would be willing to offer up to 1.07 MPLX Common Units for each outstanding ANDX Common Unit in support of a potential merger transaction with ANDX, but that the MPLX Conflicts Committee would not support an exchange ratio higher than 1.07 MPLX Common Units for each outstanding ANDX Common Unit.

Later that same day, the MPLX Board held a regularly scheduled meeting in Findlay, Ohio.

On the morning of April 25, 2019, Mr. Cornelius spoke with Mr. Heminger. Mr. Heminger, acting on behalf of MPC, stated he wanted to be responsive to the ANDX Conflicts Committee’s concerns about the dilutive impact of the Initial MPC Proposal to the ANDX Public Unitholders. To help bridge the differences between the Initial MPC Proposal and the April 24 ANDX Response, Mr. Heminger, acting on behalf of MPC, proposed that MPC would make a supplemental cash payment to the ANDX Public Unitholders in order to make the Initial MPC Proposal 2.5% accretive to ANDX Public Unitholders for 2019.

Later that same morning, the ANDX Conflicts Committee held a telephonic meeting with representatives of Goldman Sachs and Sidley. Mr. Cornelius provided the ANDX Conflicts Committee an overview of his conversation with Mr. Heminger prior to the meeting and the proposed supplemental cash payment. The ANDX Conflicts Committee requested Goldman Sachs provide an updated analysis of the Initial MPC Proposal, including the supplemental cash payment. The ANDX Conflicts Committee adjourned the meeting to be reconvened later that day.

Following the ANDX Conflicts Committee meeting, Mr. Cornelius emailed Mr. Heminger to request a clarification about the dollar amount proposed as a supplemental cash payment. Mr. Heminger responded by email that the amount of parent support, which could include cash to provide 2019 accretion for ANDX Public Unitholders, using MPC management projections, was “in the ballpark of $250 million.”

Later that same day, the ANDX Conflicts Committee reconvened its telephonic meeting with representatives from Goldman Sachs and Sidley. Representatives of Goldman Sachs provided an overview of Goldman Sachs’ and Barclays’ previous discussions regarding certain financial aspects of a potential transaction and different perspectives as to the financial implications of a potential transaction. Additionally, representatives of Goldman Sachs discussed financial analyses of the Initial MPC Proposal, as supplemented by the cash payment proposal. After discussion, the ANDX Conflicts Committee authorized Mr. Cornelius to deliver a counteroffer to Mr. Heminger of (i) a 1.10x exchange ratio for ANDX Public Unitholders, plus cash consideration of $2.75 for each ANDX Common Unit held by the public (representing a total implied cash value of approximately $250 million), noting that this counteroffer represented a value equivalent to a 1.185x exchange ratio, which was less than the April 24 ANDX Response; (ii) with respect to ANDX Common Units held by MPC affiliates, such MPC affiliates would receive an “at-market” exchange ratio and no cash consideration; (iii) a commitment that the quarterly distribution on the ANDX Common Units would be paid at current levels through the closing of the proposed transaction; and (iv) acceptable other terms and conditions around transaction documentation (the “April 25 ANDX Response”). Following the ANDX Conflicts Committee meeting, Mr. Cornelius responded by email to Mr. Heminger with the April 25 ANDX Response.

Later that same day, Mr. Heminger responded by email that his proposal was intended to be inclusive of all value that MPC was forgoing to “top up” the difference between an “at-market” transaction and the value that he believed MPLX would agree to, and then added value to get ANDX Public Unitholders some accretion in 2019. He expressed surprise that the ANDX Conflicts Committee would view his proposal as an additional $250 million in cash. Mr. Heminger stated that his all-in offer represented an exchange ratio of 1.10x to ANDX and a supplemental cash payment in order to have ANDX accretion equal MPLX accretion in the first year (the “April 25 MPC Proposal”).

 

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On the morning of April 26, 2019, Mr. Cornelius spoke with Mr. Heminger by phone. Mr. Heminger, acting on behalf of MPC, reiterated that he believed the April 25 MPC Proposal was fair. Mr. Cornelius informed Mr. Heminger that the ANDX Conflicts Committee was meeting later that morning.

Later that same morning, the ANDX Conflicts Committee held a telephonic meeting with representatives of Goldman Sachs and Sidley. Representatives of Goldman Sachs discussed preliminary financial analyses of the April 25 MPC Proposal. The ANDX Conflicts Committee requested that Goldman Sachs clarify certain understandings with Barclays before the ANDX Conflicts Committee would send any response to the proposal.

Later that same day, representatives of Goldman Sachs discussed with representatives of Barclays the ANDX Conflicts Committee’s understandings with respect to the April 25 MPC Proposal. Representatives of Barclays provided representatives of Goldman Sachs with additional detail into the basis for the April 25 MPC Proposal; however, representatives of Barclays stated that it was unable to fully explain any discrepancies between Mr. Heminger’s proposal and Mr. Cornelius’ interpretation of the proposal, as representatives of Barclays did not participate in the discussion.

Later that same day, following Mr. Cornelius’ receipt of feedback from representatives of Goldman Sachs regarding their discussions with representatives of Barclays, Mr. Cornelius delivered an email to Mr. Heminger to request in writing the specifics of the April 25 MPC Proposal, including the exchange ratio to be received by the ANDX Public Unitholders, the exchange ratio to be received by MPC’s affiliates, and any cash consideration to be received by the ANDX Public Unitholders. The email noted that the ANDX Conflicts Committee rejected the 1.10x exchange ratio included in the April 25 MPC Proposal, and summarized the follow-up conversations between Mr. Heminger and Mr. Cornelius regarding the inclusion of cash consideration to facilitate a transaction.

Later that same day, Mr. Heminger, acting on behalf of MPC, delivered to Mr. Cornelius via email a written offer proposing an exchange ratio to ANDX Public Unitholders of 1.10x, an exchange ratio to MPC’s affiliates of 1.0528x, and additional discussion to be held regarding any dilution to ANDX Public Unitholders estimated for 2019, with MPC total support not to exceed $250 million in premium forgone on ANDX Common Units held by MPC’s affiliates, together with any contemplated cash consideration (the “April 26 MPC Proposal”).

On the morning of April 27, 2019, the ANDX Conflicts Committee held a telephonic meeting with representatives of Goldman Sachs and Sidley. At the meeting, Goldman Sachs discussed preliminary financial analyses of the April 26 MPC Proposal. After discussion, the ANDX Conflicts Committee authorized the delivery of a counteroffer to Mr. Heminger proposing a 1.15x exchange ratio to the ANDX Public Unitholders, with up to 0.05x being payable either in MPLX units or fulfilled in cash of equivalent value (the “April 27 ANDX Response”).

Later that morning, at the direction of MPC and the MPLX Conflicts Committee, Latham & Watkins delivered an initial draft of the Merger Agreement to representatives of Sidley. The initial draft Merger Agreement contemplated, among other things, only a single exchange ratio for all ANDX Common Unitholders, no covenant regarding future levels of ANDX distributions, a support agreement from MPC’s affiliates, and a continuation of waived distributions by MPC’s affiliates on the ANDX Special Limited Partner Interest in a new MPLX Special Limited Partner Interest.

Later that same day, Mr. Cornelius delivered an email counterproposal to Mr. Heminger with the April 27 ANDX Response. The email counterproposal with the April 27 ANDX Response proposed a 1.15x exchange ratio to the ANDX Public Unitholders, noting that the ANDX Conflicts Committee would be receptive to all-equity consideration or a 1.10x exchange ratio for the ANDX Public Unitholders, with the remaining 0.05x exchange ratio fulfilled in cash, which would represent $1.63 per ANDX Common Unit. The email correspondence also noted that the ANDX Conflicts Committee would like a commitment from MPC for the ANDX quarterly distribution to be paid for both the first and second quarters of 2019, as applicable.

 

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Later that same day, Mr. Cornelius held a call with Mr. Heminger during which Mr. Heminger, acting on behalf of MPC, presented a counteroffer proposing an exchange ratio of 1.11x for the ANDX Public Unitholders, an exchange ratio of 1.0471x for MPC’s affiliates, and MPC’s agreement to hold the ANDX distribution at the proposed first quarter 2019 level for distributions paid in respect of the second and third quarters of 2019 (the “April 27 MPC Proposal”). Mr. Cornelius reiterated the ANDX Conflicts Committee’s position regarding the 1.15x exchange ratio for the ANDX Public Unitholders, but advised Mr. Heminger that he would discuss MPC’s proposal with the full ANDX Conflicts Committee.

Later that evening, the ANDX Conflicts Committee held another teleconference meeting with representatives of Goldman Sachs and Sidley. At the meeting, Goldman Sachs discussed preliminary financial analyses of the April 27 MPC Proposal. Following the meeting, Mr. Cornelius communicated a non-binding counteroffer to Mr. Heminger by email proposing a 1.15x exchange ratio for the ANDX Public Unitholders and a 1.0471x exchange ratio for MPC’s affiliates, and with ANDX distributions to be maintained at current levels through the closing of the proposed transaction. Mr. Cornelius emphasized that the counteroffer “is simply our bottom line.” Mr. Cornelius further noted that such counteroffer would not include any other special voting by ANDX unitholders, such as a “majority of the minority” construct, which is an alternative approval process available to ANDX GP under the ANDX Partnership Agreement in lieu of seeking “Special Approval” from the ANDX Conflicts Committee.

On April 28, 2019, the ANDX Conflicts Committee held a telephonic meeting with representatives of Goldman Sachs and Sidley. At this meeting, Goldman Sachs discussed preliminary financial analyses of certain financial aspects of the potential transaction. After further discussion, the ANDX Conflicts Committee members unanimously agreed that the committee’s prior offer proposing a 1.15x exchange ratio for the ANDX Public Unitholders should not be changed, and that Mr. Cornelius should communicate the same to Mr. Heminger.

Later that same day, Mr. Cornelius emailed Mr. Heminger informing him of the ANDX Conflicts Committee’s understanding with respect to the effects of the exchange ratios, and that Mr. Cornelius believed that the ANDX Conflicts Committee remained focused on obtaining the right value for the ANDX Public Unitholders. Mr. Cornelius emphasized that the committee believed the proposed 1.15x exchange ratio for the ANDX Public Unitholders (and the proposed 1.0471x exchange ratio for MPC’s affiliates) should work for all parties, as the committee believed it would be accretive to both ANDX and MPLX, in line with premiums for precedent transactions and represent a value per unit on a discounted cash flow basis only slightly above the status quo valuation based on ANDX management’s forecasts. Mr. Cornelius noted that he expected to receive a call from Mr. Heminger that evening.

Later that evening, Mr. Cornelius and Mr. Heminger spoke again. Mr. Heminger informed Mr. Cornelius that the MPC Board had not authorized him to increase his previous offer regarding sponsor support for the transaction, and informed Mr. Cornelius that he did not believe MPLX would approve a transaction above a 1.07x blended exchange ratio. He asked Mr. Cornelius again whether he could move from the proposed 1.15x exchange ratio, and Mr. Cornelius informed him that the ANDX Conflicts Committee was not able to move under the current facts and circumstances. Mr. Cornelius advised the other ANDX Conflicts Committee members of the conversation.

On April 29, 2019, the ANDX Board held a telephonic meeting at which a regular quarterly distribution for the first quarter of 2019 of $1.03 per ANDX Common Unit was approved. Separately, Mr. Cornelius requested that a meeting of the ANDX Conflicts Committee and its advisors be scheduled for later in the week in anticipation of further discussions.

On May 1, 2019, the ANDX Conflicts Committee held a telephonic meeting with representatives of Goldman Sachs and Sidley. At the meeting, representatives of Goldman Sachs discussed preliminary financial analyses of certain financial aspects of the potential transaction. After discussion, the ANDX Conflicts Committee determined to wait to hear from MPC or MPLX on any further responses. Mr. Cornelius advised the

 

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committee members that he would keep them informed on further feedback from Mr. Heminger. He also advised the ANDX Conflicts Committee that he had heard from Gregory Goff, a director of MPLX and ANDX, as well as the Executive Vice Chairman of MPC.

On May 1, 2019, Jones Day sent a draft of the Support Agreement to Latham & Watkins.

On May 2, 2019, Mr. Goff, acting on behalf of MPC, met with Mr. Cornelius at Mr. Cornelius’ office in Houston, Texas. Mr. Goff discussed his understanding of the status of negotiations, his hope that negotiations could advance to conclusion and his views on the risks of a standalone approach for ANDX. Mr. Goff reviewed the Barclays accretion/dilution analysis with Mr. Cornelius, and inquired why prior offers by Mr. Heminger had not been acceptable. Mr. Cornelius responded by pointing to the 1.15x exchange ratio, and asked why that was not acceptable. Mr. Goff then asked whether a 1.135x exchange ratio would work. Mr. Cornelius informed him that he would inquire about that with the ANDX Conflicts Committee.

Later that same day, Mr. Heminger, acting on behalf of MPC, discussed with Mr. Helms a potential merger transaction in which the ANDX Public Unitholders would receive 1.135 MPLX Common Units for each outstanding ANDX Common Unit held by them and MPC’s affiliates would receive 1.0328 MPLX Common Units for each outstanding ANDX Common Unit held by such MPC affiliates, resulting in a blended exchange ratio of 1.07 MPLX Common Units for each outstanding ANDX Common Unit.

Later that evening, Mr. Cornelius and Mr. Heminger spoke by phone. Mr. Heminger, acting on behalf of MPC, confirmed MPC would be interested in pursuing a transaction at a 1.135x exchange ratio for the ANDX Public Unitholders (the “May 2 MPC Proposal”), and Mr. Cornelius informed him that he would inquire with the ANDX Conflicts Committee. Mr. Heminger noted he could not yet confirm a definitive exchange ratio for MPC’s affiliates, as he would need to confirm the calculation. Later that evening, Mr. Cornelius and representatives from Goldman Sachs discussed and corresponded regarding the May 2 MPC Proposal, and confirmed that the exchange ratio to be received by MPC’s affiliates would be 1.0328x in order to achieve a blended exchange ratio of 1.07x.

Later that evening, the ANDX Conflicts Committee held a telephonic meeting with representatives from Goldman Sachs and Sidley. At the meeting, Mr. Cornelius updated the ANDX Conflicts Committee and its advisors of his conversations with Mr. Heminger and Mr. Goff, his understanding of the May 2 MPC Proposal, and his understanding that the May 2 MPC Proposal would be considered by the MPC Board. At this meeting, the ANDX Conflicts Committee agreed to support a transaction based on a 1.135x exchange ratio for the ANDX Public Unitholders, a 1.0328x exchange ratio for MPC’s affiliates, and ANDX distributions continued at the current rate through the effective date of the proposed transaction.

On May 4, 2019, the ANDX Conflicts Committee and representatives from Goldman Sachs and Sidley corresponded regarding the May 2 MPC Proposal, which the ANDX Conflicts Committee understood to require a 1.135x exchange ratio for the ANDX Public Unitholders and 1.0328x exchange ratio for MPC’s affiliates, for a blended exchange ratio of 1.07x, along with an agreement to continue current ANDX distribution levels, and Merger Agreement terms reflecting the same. Later on May 4, 2019, Sidley delivered comments to the Merger Agreement to representatives of Latham & Watkins and Jones Day.

Later that same day, Mr. Cornelius and Mr. Heminger corresponded by email about Merger Agreement terms relating to the continuation of regular ANDX quarterly distributions at the current level prior to the effective time of the proposed transaction. Representatives from Sidley and Jones Day also discussed the same.

On May 4, 2019, at the direction of MPC and the MPLX Conflicts Committee, Latham & Watkins sent a draft of the Support Agreement to Sidley.

On May 5, 2019, Jones Day, Latham & Watkins and Sidley exchanged comments to the draft Merger Agreement and draft Support Agreement, as well as disclosure schedules, and negotiated open terms, including the covenant relating to ANDX distributions.

 

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On May 6, 2019, Latham & Watkins and Sidley exchanged comments to the draft Merger Agreement and draft Support Agreement, as well as disclosure schedules, and negotiated final terms, including covenants relating to ANDX distributions and an amendment to the omnibus agreement with ANDX. A revised draft Merger Agreement exchanged by the parties included a proposed exchange ratio of 1.135x for the ANDX Public Unitholders and a proposed exchange ratio of 1.0328x for MPC’s affiliates.

On that same day, the MPLX Conflicts Committee held a telephonic meeting with representatives of Jefferies and Latham & Watkins to discuss the proposed merger transaction. Latham & Watkins reviewed with the MPLX Conflicts Committee the terms of the latest draft of the Merger Agreement, including, among other items, closing conditions, representations and warranties, operating covenants and termination provisions. Latham & Watkins also reviewed with the MPLX Conflicts Committee the terms of the Support Agreement and reported on the results of Latham & Watkins’ legal due diligence review of ANDX.

Also on May 6, 2019, the MPC Board approved by way of a unanimous action by written consent the acceptance of a 1.0328x exchange ratio for the ANDX common units held by MPC’s affiliates and also approved the Support Agreement.

On May 7, 2019, the ANDX Conflicts Committee met with representatives of Goldman Sachs and Sidley to review and discuss the proposed transaction. Representatives of Goldman Sachs discussed financial analyses of the proposed transaction. Following the presentation and responses to questions from ANDX Conflicts Committee members, representatives of Goldman Sachs rendered its oral fairness opinion, subsequently confirmed in writing, that, as of May 7, 2019 and based upon and subject to the factors and assumptions set forth therein, the Public Unitholder Exchange Ratio pursuant to the Merger Agreement was fair from a financial point of view to the holders of the Public Unitholder Eligible Units.

Representatives of Sidley then summarized for the ANDX Conflicts Committee the material terms of the Merger Agreement and the Support Agreement. Representatives of Sidley and the ANDX Conflicts Committee then reviewed and discussed reasons for approval of the Merger and the Merger Agreement, and disadvantages relating to the same. The ANDX Conflicts Committee also provided additional feedback on reasons for individual support for the transaction, including risks associated with a standalone strategy. After further discussion with the representatives of Sidley and Goldman Sachs, the ANDX Conflicts Committee, acting in good faith, unanimously (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are in, or not opposed to, the best interests of, ANDX and its subsidiaries treated as a single consolidated entity and the holders of Public Unitholder Eligible Units, (ii) approved and declared advisable the Merger and the consummation of the transactions contemplated by the Merger Agreement, which such approval in (i) and (ii) constituted “Special Approval” under the ANDX Partnership Agreement, and (iii) recommended that the ANDX Board approve the Merger Agreement, the other Transaction Documents and the transactions contemplated thereby, including the Merger.

Later on May 7, 2019, the ANDX Board held a telephonic meeting. Upon the receipt of the recommendation of the ANDX Conflicts Committee, the ANDX Board unanimously determined that the Merger Agreement, the other Transaction Documents and the transactions contemplated thereby, including the Merger, are in, or not opposed to, the best interests of ANDX and its subsidiaries treated as a single consolidated entity, approved and declared advisable the Merger Agreement, the other Transaction Documents to which ANDX and ANDX GP are a party and the transactions contemplated thereby, including the Merger, and resolved to recommend that the holders of ANDX Common Units adopt the Merger Agreement and approve the transactions contemplated thereby, including the Merger, and directed that the Merger Agreement be submitted to the holders of ANDX Common Units for their adoption by written consent.

On that same day, Mr. Helms, on behalf of the MPLX Conflicts Committee, sent a letter dated the same date stating that the MPLX Conflicts Committee was pleased to submit its non-binding proposal of an all-unit transaction with an exchange ratio of 1.135x MPLX Common Units for each outstanding ANDX Common Unit

 

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that is held by the ANDX Public Unitholders and an exchange ratio of 1.0328x MPLX Common Units for each outstanding ANDX Common Unit held by MPC’s affiliates.

Later that same day, the MPLX Conflicts Committee held a telephonic meeting with representatives of Jefferies and Latham & Watkins to discuss the transaction. Latham & Watkins reviewed with the MPLX Conflicts Committee several updates to the terms of the Merger Agreement and the Support Agreement, including, among other items, the revision of the Support Agreement to include an agreement by MPC to amend ANDX’s existing omnibus agreement to change the definition of a “Partnership Change of Control,” such that the Merger would not provide MPC and its affiliates with an option to terminate certain of their obligations thereunder. Jefferies discussed with the MPLX Conflicts Committee its financial analysis regarding the potential merger transaction and the exchange ratios. Following such discussions, the MPLX Conflicts Committee, in good faith, unanimously (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, were not adverse to the best interests of MPLX and its subsidiaries treated as a single consolidated entity and the MPLX Public Unitholders, (ii) approved the Merger Agreement and the consummation of transactions contemplated thereby, including the Merger, which such approval in (i) and (ii) constituted “Special Approval” under the MPLX Partnership Agreement, and (iii) recommended that the MPLX Board approve the Merger Agreement and the consummation of the transactions contemplated thereby, including the Merger.

Later on May 7, 2019, the MPLX Board held a telephonic meeting. Upon the receipt of the recommendation of the MPLX Conflicts Committee, the MPLX Board unanimously determined that the Merger Agreement, the other Transaction Documents and the transactions contemplated thereby, including the Merger, are not adverse to the best interests of MPLX and its subsidiaries treated as a single consolidated entity, and approved and declared the Merger Agreement, the other Transaction Documents to which MPLX and MPLX GP are a party and the transactions contemplated thereby, including the Merger, advisable.

Later that same day, the parties executed the Merger Agreement and the Support Agreement.

On May 8, 2019, prior to market open, MPC, MPLX and ANDX issued a press release announcing the Merger.

Amended and Restated MPLX Partnership Agreement

The Merger Agreement provides that, prior to the closing, MPC and MPLX will take all actions as are necessary and appropriate to amend and restate the MPLX Partnership Agreement to allow for the creation and issuance of the MPLX Series B Preferred Units, the MPLX Special Limited Partner Interest and the MPLX TexNew Mex Units. The form of the amended and restated MPLX Partnership Agreement is attached to this consent statement/prospectus as Annex C and is incorporated herein by reference. You should read the MPLX Partnership Agreement because it, and not this consent statement/prospectus, is the legal document that, upon its execution and delivery, will govern the rights of MPLX Unitholders following the effective time of the Merger. For additional information regarding the MPLX Partnership Agreement, see “Comparison of Unitholders’ Rights—MPLX Unitholders” beginning on page 139.

Recommendation of the ANDX Board

On May 7, 2019, the ANDX Conflicts Committee unanimously determined that the Merger Agreement and the transactions contemplated thereby are in, or not opposed to, the best interests of ANDX and its Subsidiaries treated as a single consolidated entity and the holders of Public Unitholder Eligible Units, approved the Merger and the consummation of the transactions contemplated thereby (the foregoing constituting “Special Approval” under the ANDX Partnership Agreement), and recommended that the ANDX Board approve the Merger, the Transaction Documents and the consummation of the transactions contemplated thereby (the “ANDX Conflicts Committee Recommendation”).

 

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Upon receipt of the ANDX Conflicts Committee Recommendation, the ANDX Board unanimously determined that the Merger Agreement, the other Transaction Documents and the transactions contemplated thereby, including the Merger are in, or not opposed to, the best interests of ANDX and its subsidiaries treated as a single consolidated entity, approved the Merger Agreement, the other Transaction Documents to which ANDX and ANDX GP are a party and the transactions contemplated thereby, including the Merger, and resolved to recommend that the holders of ANDX Common Units vote “FOR” the adoption of the Merger Agreement and the approval of the transactions contemplated thereby, including the Merger, a vote “FOR” the Non-Binding Compensation Advisory Proposal, and directed that the Merger Agreement and the Non-Binding Compensation Advisory Proposal be submitted to a vote of holders of ANDX Common Units by written consent.

Reasons for the Recommendation of the ANDX Board

The ANDX Board consulted with its legal advisors and financial advisors and considered many factors in its evaluation of the Merger. The ANDX Board considered the following factors to be generally positive or favorable in making its determination and approvals with respect to the Merger and its related recommendation to the ANDX unitholders:

 

   

The financial terms offered to the ANDX Public Unitholders, including:

 

   

The consideration to be paid to ANDX Public Unitholders of 1.135 MPLX Common Units for each ANDX Common Unit (such MPLX Common Units, the “Public Unitholder Merger Consideration”), represents:

 

   

An 8% premium to the 30-day volume-weighted average closing price for the period ended on May 2, 2019 (the third to last trading day before the meeting of the ANDX Conflicts Committee that approved the Merger); and

 

   

A 6% premium to ANDX’s closing price on May 2, 2019 (the third to last trading day before the meeting of the ANDX Conflicts Committee that approved the Merger).

 

   

The affiliate support by MPC and its subsidiaries with lower consideration to be paid per ANDX Common Unit held by ANDX GP and ANDX Refining Southwest, at an exchange ratio of 1.0328 MPLX Common Units (the “Affiliated Unitholder Merger Consideration”), which represents 15,960,894 fewer MPLX Common Units issuable to MPC and its subsidiaries compared to an exchange ratio of 1.135x MPLX Common Units for the Public Unitholder Merger Consideration.

 

   

The fact that the exchange ratios are fixed, and therefore not subject to negative trading discrepancies.

 

   

The ANDX Public Unitholders would be entitled to the right to receive MPLX Common Units at the Public Unitholder Exchange Ratio, which is an exchange ratio the ANDX Conflicts Committee viewed as fair and reasonable in light of ANDX’s recent and projected financial performance, MPLX’s recent and projected financial performance, and relative past trading prices of the ANDX Common Units and MPLX Common Units, as well as the strengths of the surviving entity and benefits to be received by the holders of ANDX Common Units, including, among others:

 

   

The combined partnership’s lower pro forma leverage relative to the existing leverage of ANDX, and greater financial flexibility of a less levered entity; and

 

   

The combined partnership’s forecast higher distribution coverage relative to ANDX standalone, which is expected to provide strengthened distribution stability and long-term growth prospects, enhancing funding optionality and reducing reliance on capital markets.

 

   

The ANDX Conflicts Committee believed the Public Unitholder Exchange Ratio was the highest exchange ratio the MPLX Conflicts Committee would be willing to accept on a blended basis when taken together with the Affiliated Unitholder Merger Consideration issuable at a lower exchange ratio in support of the Merger.

 

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The risks of ANDX pursuing a standalone strategy, including its anticipated cost of capital and ability to maintain its current distribution levels and to receive additional dropdown opportunities from MPC.

 

   

The fact that the Merger will simplify the organizational structure of MPC and its subsidiaries, thereby eliminating potential for conflicts of interests between MPLX and ANDX.

 

   

The additional public float and expected additional liquidity in MPLX Common Units.

 

   

The delivery of an opinion by Goldman Sachs to the ANDX Conflicts Committee on May 7, 2019, that, as of such date and based on and subject to the assumptions, limitations and qualifications set forth in the opinion and based on other matters as Goldman Sachs considered relevant, the Public Unitholder Exchange Ratio provided for pursuant to the Merger Agreement was fair, from a financial point of view, to the ANDX Public Unitholders.

 

   

The fact that the Merger is generally not expected to be taxable to ANDX or the ANDX Public Unitholders.

The ANDX Board considered the following factors to be generally negative or unfavorable in making its determination and approvals with respect to the Merger and the related recommendation to the holders of ANDX Common Units:

 

   

In the near term, it is anticipated that regular quarterly cash distributions to the ANDX Public Unitholders on an as-exchanged basis will be lower than the current level of distributions to the ANDX Public Unitholders would be if the Merger were not completed.

 

   

The fact that the delivery of the ANDX Written Consent by ANDX GP and ANDX Refining Southwest with respect to the ANDX Common Units they own will be sufficient to adopt the Merger Agreement and thereby approve the Merger, without the receipt of written consent from any other holder of ANDX Common Units.

The foregoing discussion of the information and factors considered by the ANDX Board is not intended to be exhaustive, but includes material factors the ANDX Board considered. In view of the variety of factors considered in connection with its evaluation of the Merger and the complexity of these matters, the ANDX Board did not find it useful and did not attempt to quantify or assign any relative or specific weights to the various factors considered in making its determination and recommendation. In addition, each of the members of the ANDX Board may have given differing weights to different factors. Overall, the ANDX Board believed that the positive factors supporting the Merger outweighed the negative factors it considered.

The explanation of the reasoning of the ANDX Board and certain information presented in this section are forward-looking in nature and, therefore, the information should be read in light of the factors discussed in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 26.

Opinion of Financial Advisor to the ANDX Conflicts Committee

Goldman Sachs rendered its opinion to the ANDX Conflicts Committee that, as of May 7, 2019 and based upon and subject to the factors and assumptions set forth therein, the Public Unitholder Exchange Ratio pursuant to the Merger Agreement was fair from a financial point of view to the ANDX Public Unitholders.

The full text of the written opinion of Goldman Sachs, dated May 7, 2019, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex B to this consent statement/prospectus. Goldman Sachs provided advisory services and its opinion for the information and assistance of the ANDX Conflicts Committee in connection with its consideration of the Merger. The Goldman Sachs opinion is not a recommendation as to how any ANDX Public Unitholder should vote with respect to the Merger, or any other matter.

 

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In connection with rendering the opinion described above and performing its related financial analyses, Goldman Sachs reviewed, among other things:

 

   

the Merger Agreement;

 

   

annual reports to unitholders and Annual Reports on Form 10-K of ANDX and MPLX for the five years ended December 31, 2018;

 

   

certain interim reports to unitholders and Quarterly Reports on Form 10-Q of ANDX and MPLX;

 

   

certain other communications from ANDX and MPLX to their respective unitholders;

 

   

certain publicly available research analyst reports for ANDX and MPLX;

 

   

summary financial results for each of ANDX and MPLX for the three-month period ended March 31, 2019; and

 

   

certain internal financial analyses and forecasts for ANDX prepared by its management (which we refer to in this section as the “ANDX Standalone Forecast”), certain internal financial analyses and forecasts for MPLX standalone prepared by its management (which we refer to in this section as the “MPLX Standalone Forecast”) and certain financial analyses and forecasts for MPLX pro forma for the Merger prepared by the management of MPC and adjusted by the ANDX Conflicts Committee (which we refer to in this section as the “MPLX Pro Forma Forecast” and, collectively, with the ANDX Standalone Forecast and the MPLX Standalone Forecast, as the “Forecasts”), in each case, as approved for Goldman Sachs’ use by the ANDX Conflicts Committee, including certain cost synergies projected by the management of MPC to result from the Merger as approved for Goldman Sachs’ use by the ANDX Conflicts Committee (which we refer to in this section as the “Synergies Forecast”).

Goldman Sachs also held discussions with members of the ANDX Conflicts Committee and the managements of ANDX, MPLX and MPC regarding their respective assessment of the strategic rationale for, and the potential benefits of, the Merger and the past and current business operations, financial condition and future prospects of ANDX and MPLX; reviewed the reported price and trading activity for ANDX Common Units and MPLX Common Units; compared certain financial and stock market information for ANDX and MPLX with similar information for certain other companies the securities of which are publicly traded; and performed such other studies and analyses, and considered such other factors, as it deemed appropriate.

For purposes of rendering this opinion, Goldman Sachs, with the ANDX Conflicts Committee’s consent, relied upon and assumed the accuracy and completeness of all of the financial, legal, regulatory, tax, accounting and other information provided to, discussed with or reviewed by it without assuming any responsibility for independent verification thereof. In that regard, Goldman Sachs assumed with the ANDX Conflicts Committee’s consent that the Forecasts, including the Synergies Forecast, were reasonably prepared on a basis reflecting the best currently available estimates and judgments of the ANDX Conflicts Committee. Goldman Sachs did not make an independent evaluation or appraisal of the assets and liabilities (including any contingent, derivative or other off-balance-sheet assets and liabilities) of ANDX or MPLX or any of their respective subsidiaries and it was not furnished with any such evaluation or appraisal. Goldman Sachs assumed that all governmental, regulatory or other consents and approvals necessary for the consummation of the Merger will be obtained without any adverse effect on ANDX or MPLX or on the expected benefits of the Merger in any way meaningful to its analysis. Goldman Sachs has also assumed that the Merger will be consummated on the terms set forth in the Merger Agreement without the waiver or modification of any term or condition the effect of which would be in any way meaningful to its analysis.

Goldman Sachs’ opinion does not address the underlying business decision of ANDX to engage in the Merger, or the relative merits of the Merger as compared to any strategic alternatives that may be available to ANDX; nor does it address any legal, regulatory, tax or accounting matters. Goldman Sachs was not requested to solicit, and did not solicit, interest from other parties with respect to an acquisition of, or other business

 

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combination with, ANDX or any alternative transaction. Goldman Sachs’ opinion addresses only the fairness from a financial point of view to the holders of the Public Unitholder Eligible Units, as of the date of the opinion, of the Public Unitholder Exchange Ratio pursuant to the Merger Agreement. Goldman Sachs’ opinion does not express any view on, and does not address, any other term or aspect of the Merger Agreement or the Merger or any term or aspect of any other agreement or instrument contemplated by the Merger Agreement or entered into or amended in connection with the Merger, including the conversion of Affiliated Unitholder Eligible Units into the right to receive MPLX Common Units or the Affiliated Unitholder Exchange Ratio, any allocation of the aggregate consideration payable pursuant to the Merger Agreement, including between the holders of Public Unitholder Eligible Units and holders of Affiliated Unitholder Eligible Units, the fairness of the Merger to, or any consideration received in connection therewith by, the holders of any other class of securities, creditors or other constituencies of ANDX; nor as to the fairness of the amount or nature of any compensation to be paid or payable to any of the officers, directors or employees of ANDX, or any class of such persons in connection with the Merger, whether relative to the Public Unitholder Exchange Ratio pursuant to the Merger Agreement or otherwise. Goldman Sachs does not express any opinion as to the prices at which the MPLX Common Units will trade at any time or as to the impact of the Merger on the solvency or viability of ANDX or MPLX or the ability of ANDX or MPLX to pay their respective obligations when they come due. Goldman Sachs’ opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to it as of, the date of the opinion and Goldman Sachs assumed no responsibility for updating, revising or reaffirming its opinion based on circumstances, developments or events occurring after the date of its opinion. Goldman Sachs’ opinion was approved by a fairness committee of Goldman Sachs.

The following is a summary of the material financial analyses delivered by Goldman Sachs to the ANDX Conflicts Committee in connection with rendering the opinion described above. The following summary, however, does not purport to be a complete description of the financial analyses performed by Goldman Sachs, nor does the order of analyses described represent relative importance or weight given to those analyses by Goldman Sachs. Some of the summaries of the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description of Goldman Sachs’ financial analyses. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before May 3, 2019, the second to last trading day before the meeting of the ANDX Conflicts Committee that approved the Merger, and is not necessarily indicative of current market conditions.

Implied Exchange Ratio Analysis; Historical Stock Trading Analysis. Goldman Sachs reviewed the historical trading prices for the ANDX Common Units and the MPLX Common Units from April 27, 2018 to May 3, 2019 and calculated historical exchange ratios for the ANDX Common Units by dividing the closing price per ANDX Common Unit by the closing price per MPLX Common Unit for each day during the following periods: (i) the twelve-month period ended May 3, 2019; (ii) April 30, 2018, the first trading day after the announcement of MPC’s acquisition of Andeavor, through May 3, 2019; (iii) August 6, 2018, the last trading day before the closing of ANDX’s $1.6 billion dropdown transaction, through May 3, 2019; (iv) the six-month period ended May 3, 2019; and (v) October 26, 2018, the first trading day after the announcement of the change in ANDX’s distribution policy, through May 3, 2019. The following table presents the results of this analysis:

 

Period ending May 3, 2019

   Historical
Exchange Ratio
 

Last 12 months

     1.1816x  

Since MPC/ANDV Merger

     1.1818x  

Since ANDX $1.6bn Dropdown

     1.1623x  

Last 6 months

     1.0707x  

Since ANDX DPU Policy Announcement

     1.0760x  

 

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Illustrative Discounted Cash Flow Analysis—ANDX Standalone.

Using the ANDX Standalone Forecast, Goldman Sachs performed an illustrative discounted cash flow analysis of the ANDX Common Units on a standalone basis. Using discount rates ranging from 6.0% to 7.5%, reflecting estimates of ANDX’s weighted average cost of capital, Goldman Sachs discounted to present value as of December 31, 2018 (i) estimates of unlevered free cash flow for ANDX for fiscal years 2019 through 2023, as reflected in the ANDX Standalone Forecast and (ii) a range of illustrative terminal values for ANDX, which were calculated by applying an illustrative terminal value to EBITDA multiple range of 9.5x to 12.0x to estimated terminal year EBITDA for ANDX, which estimated terminal year EBITDA was approved for Goldman Sachs’ use by the ANDX Conflicts Committee. Goldman Sachs derived such discount rate range by application of the Capital Asset Pricing Model (“CAPM”), which requires certain partnership-specific inputs, including the partnership’s target capital structure weightings, the cost of long-term debt, after-tax yield on permanent excess cash, if any, future applicable marginal cash tax rate and a beta for the partnership, as well as certain financial metrics for the United States financial markets generally. The illustrative terminal value to EBITDA multiple ranges for ANDX were derived by Goldman Sachs using its professional judgment and experience, taking into account, among other things, EBITDA multiples implied by ANDX’s trading prices and next 12 months’ EBITDA as reported by ANDX over certain prior periods. Goldman Sachs derived a range of illustrative enterprise values for ANDX on a standalone basis by adding the ranges of illustrative present values it derived above. Goldman Sachs then subtracted from the range of illustrative enterprise values it derived for ANDX the amount of net debt and preferred equity for ANDX as of December 31, 2018 as reported by ANDX to derive a range of illustrative equity values. Goldman Sachs then divided the range of illustrative equity values it derived by the number of fully diluted outstanding units of ANDX, as provided by the management of ANDX and approved for Goldman Sachs’ use by the ANDX Conflicts Committee, to derive a range of illustrative present values per ANDX Common Unit on a standalone basis of $42.56 to $61.28.

Illustrative Discounted Cash Flow Analysis—Implied Valuation Uplift.

Using the MPLX Pro Forma Forecast, Goldman Sachs performed an illustrative discounted cash flow analysis on the MPLX Common Units pro forma for the Merger and calculated the implied valuation uplift for the Public Unitholder Eligible Units upon consummation of the Merger. Using (i) discount rates ranging from 6.0% to 7.5% (referred to in this section as the “Standalone DCF Discount Rate Range”), reflecting estimates of the weighted average cost of capital of ANDX on a standalone basis, and (ii) discount rates ranging from 5.5% to 7.0% (referred to in this section as the “Blended DCF Discount Rate Range”), reflecting estimates of the blended weighted average cost of capital of each of ANDX and MPLX on a standalone basis, Goldman Sachs discounted to present value as of December 31, 2018 (i) estimates of unlevered free cash flow for MPLX pro forma for the Merger (including free cash flow resulting from the estimated synergies as reflected in the Synergies Forecast) for the years 2019 through 2023, as reflected in the MPLX Pro Forma Forecast and (ii) a range of illustrative terminal values for MPLX pro forma for the Merger, which were calculated by applying an illustrative terminal value to EBITDA multiple range of 9.5x to 12.0x to estimated terminal year EBITDA for MPLX pro forma for the Merger, which estimated terminal year EBITDA was approved for Goldman Sachs’ use by the ANDX Conflicts Committee. Goldman Sachs derived such discount rate range by application of CAPM, which requires certain partnership-specific inputs, including the partnership’s target capital structure weightings, the cost of long-term debt, after-tax yield on permanent excess cash, if any, future applicable marginal cash tax rate and a beta for the partnership, as well as certain financial metrics for the United States financial markets generally. The illustrative terminal value to EBITDA multiple ranges for MPLX pro forma for the Merger were derived by Goldman Sachs using its professional judgment and experience, taking into account, among other things, EBITDA multiples implied by trading prices for ANDX and MPLX and next-12 months’ EBITDA as reported by ANDX and MPLX over certain prior periods. Goldman Sachs derived a range of illustrative enterprise values for MPLX pro forma for the Merger by adding the ranges of illustrative present values it derived above. Goldman Sachs then subtracted from the range of illustrative enterprise values it derived for MPLX pro forma for the Merger the estimated amount of net debt and nonconvertible preferred equity for MPLX pro forma for the Merger and book values of MPLX’s non-controlling interests, in each case as of December 31, 2018 and as

 

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reported by MPLX to derive a range of illustrative equity values for MPLX pro forma for the Merger. Goldman Sachs then divided the range of illustrative equity values it derived by the number of fully diluted outstanding units of MPLX pro forma for the Merger, as provided by the management of MPC and approved for Goldman Sachs’ use by the ANDX Conflicts Committee, to derive a range of illustrative present values per MPLX Common Unit pro forma for the Merger. Goldman Sachs then calculated a range of illustrative implied values for the pro forma value to be received per Public Unitholder Eligible Unit pursuant to the Merger Agreement by multiplying the implied price per MPLX Common Units pro forma for the Merger derived from the above analysis by the Public Unitholder Exchange Ratio. This analysis resulted in a range of illustrative implied values for the pro forma value to be received per Public Unitholder Eligible Unit pursuant to the Merger Agreement of (i) $43.66 to $61.84 using the Standalone DCF Discount Rate Range and (ii) $45.01 to $63.63 using the Blended DCF Discount Rate Range.

Illustrative Present Value of Future Unit Price Analysis—ANDX GP Standalone.

Goldman Sachs performed an illustrative analysis of the implied present values of illustrative future values per ANDX Common Unit, which is designed to provide an indication of the present value of a theoretical future value of an entity’s equity as a function of such entity’s financial multiples. Goldman Sachs first calculated the illustrative implied value per ANDX Common Unit on a standalone basis as of December 31, 2022 by applying a range of illustrative EV/EBITDA multiples of 9.5x to 12.0x to estimated EBITDA for ANDX for fiscal year 2022, as reflected in the ANDX Standalone Forecast. The illustrative multiple estimates were derived by Goldman Sachs utilizing its professional judgment and experience, taking into account current and historical trading data and illustrative multiple estimates for ANDX and MPLX. To derive illustrative implied equity values per ANDX Common Unit on a standalone basis, Goldman Sachs subtracted from the range of illustrative enterprise values it derived for ANDX on a standalone basis the amount of ANDX’s net debt as of December 31, 2022 as reflected in the ANDX Standalone Forecast and the book value of ANDX’s preferred equity as of December 31, 2022 as approved for Goldman Sachs’ use by the ANDX Conflicts Committee. Goldman Sachs then divided the range of illustrative equity values it derived by the number of fully diluted outstanding units of ANDX on a standalone basis, as provided by ANDX management and approved for Goldman Sachs’ use by the ANDX Conflicts Committee to derive a range of illustrative values per ANDX Common Unit on a standalone basis as of December 31, 2022. Goldman Sachs then discounted to present value as of December 31, 2018, using a range of illustrative discount rates of 7.0% to 8.0%, reflecting an estimate of ANDX’s cost of equity, the sum of (i) the theoretical future value of ANDX Common Units as of December 31, 2022 and (ii) the aggregate per unit distributions estimated for each of the fiscal years 2019 to 2022 as reflected in the ANDX Standalone Forecast. Goldman Sachs derived such discount rate range by application of CAPM, which requires certain entity-specific inputs, including a beta for the entity, as well as certain financial metrics for the United States financial markets generally. This analysis resulted in a range of illustrative implied present values per ANDX Common Unit of $43.61 to $59.77.

Illustrative Present Value of Future Unit Price Analysis—Implied Valuation Uplift.

Goldman Sachs performed an illustrative analysis of the implied present values of illustrative future values per MPLX Common Unit pro forma for the Merger and calculated the implied valuation uplift for ANDX Common Units upon consummation of the Merger. Goldman Sachs first calculated the illustrative implied value per MPLX Common Unit pro forma for the Merger as of December 31, 2022 by applying a range of illustrative EV/EBITDA multiples of 9.5 to 12.0 to estimated EBITDA of MPLX pro forma for the Merger for fiscal year 2022, as reflected in the MPLX Pro Forma Forecast. The illustrative multiple estimates were derived by Goldman Sachs utilizing its professional judgment and experience, taking into account current and historical trading data and illustrative EV/EBITDA multiple estimates for ANDX and MPLX. To derive illustrative implied equity values per MPLX Common Unit pro forma for the Merger, Goldman Sachs subtracted from the range of illustrative enterprise values it derived for MPLX pro forma for the Merger the amount of MPLX’s net debt and nonconvertible preferred equity pro forma for the Merger as of December 31, 2022 as reflected in the MPLX Pro

 

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Forma Forecast and book value of MPLX’s non-controlling interests as of December 31, 2022 as approved for Goldman Sachs’ use by the ANDX Conflicts Committee. Goldman Sachs then divided the range of illustrative equity values it derived by the number of fully diluted outstanding units of MPLX pro forma for the Merger, as provided by MPC management and approved for Goldman Sachs’ use by the ANDX Conflicts Committee to derive a range of illustrative values per MPLX Common Unit as of December 31, 2022. Goldman Sachs then discounted to present value as of December 31, 2018, using (i) a range of illustrative discount rates of 7.0% to 8.0% (referred to in this section as the “Standalone PV of FUP Discount Rate Range”), reflecting an estimate of ANDX’s cost of equity on a standalone basis and (ii) a range of illustrative discount rates of 6.5% to 7.5% (referred to in this section as the “Blended PV of FUP Discount Rate Range”), reflecting estimates of the blended cost of equity of each of ANDX and MPLX on a standalone basis, the sum of (i) the theoretical future value of MPLX Common Units pro forma for the Merger as of December 31, 2022 and (ii) the aggregate per unit distributions estimated for each of the years 2019 to 2022, as reflected in the MPLX Pro Forma Forecast to derive a range or illustrative implied present values per MPLX Common Unit pro forma for the Merger. Goldman Sachs also discounted to present value as of December 31, 2018, using the Standalone PV of FUP Discount Rate Range and the Blended PV of FUP Discount Rate Range, the distribution per ANDX Common Unit paid by ANDX for the first quarter of 2019. Goldman Sachs derived such discount rate range by application of CAPM, which requires certain entity-specific inputs, including a beta for the entity, as well as certain financial metrics for the United States financial markets generally. Goldman Sachs then calculated a range of illustrative implied values for the pro forma value to be received per Public Unitholder Eligible Unit pursuant to the Merger Agreement by adding (i) the product obtained by multiplying the implied present values per MPLX Common Units pro forma for the Merger derived from the above analysis by the Public Unitholder Exchange Ratio and (ii) implied present value of the distribution per ANDX Common Unit paid by ANDX for the first quarter of 2019. This analysis resulted in a range of illustrative implied present values for the pro forma value to be received per Public Unitholder Eligible Unit pursuant to the Merger Agreement of (i) $44.76 to $60.56 using the Standalone PV of FUP Discount Rate Range and (ii) $45.49 to $61.59 using the Blended PV of FUP Discount Rate Range.

Illustrative Contribution Analysis. Goldman Sachs analyzed the implied contribution of ANDX (calculated based on the relative contributions of the Public Unitholder Eligible Units and the Affiliated Unitholder Eligible Units) and MPLX to the pro forma combined partnership using (i) an illustrative standalone equity value for ANDX and MPLX, calculated using the closing price per ANDX Common Unit and MPLX Common Unit as of May 3, 2019 and the number of fully diluted outstanding ANDX Common Units and MPLX Common Units as provided by management of ANDX and MPLX, respectively, and approved for Goldman Sachs’ use by the ANDX Conflicts Committee, (ii) estimated EBITDA for fiscal years 2019 through 2021, as reflected in the ANDX Forecast and the MPLX Forecast, respectively, and (iii) estimated distributable cash flow for fiscal years 2019 through 2021, as reflected in the ANDX Forecast and the MPLX Forecast, respectively.

The following table presents the results of this analysis:

 

Metric

  Public Unitholder Eligible
Units Implied Equity Value
Contribution to Pro Forma
Combined Partnership
    Affiliated Unitholder
Eligible Units Implied
Equity Value Contribution
to Pro Forma Combined
Partnership
    MPLX Implied Equity Value
Contribution to Pro Forma
Combined Partnership
 

Diluted Market Cap.

    8.8     15.3     75.9

EBITDA

     

2019E

    9.4     16.5     74.1

2020E

    8.9     15.6     75.4

2021E

    9.2     16.0     74.8

Distributable Cash Flow

     

2019E

    9.3     16.3     74.4

2020E

    8.9     15.6     75.4

2021E

    8.9     15.6     75.5

 

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Pro Forma Merger Analysis. Goldman Sachs prepared illustrative pro forma analyses of the potential financial impact of the Merger using the ANDX Standalone Forecast and the MPLX Pro Forma Forecast. For each of the calendar years 2019 to 2023 Goldman Sachs compared the distributable cash flows per ANDX Common Unit on a standalone basis and the distributions per ANDX Common Unit on a standalone basis to the distributable cash flows per MPLX Common Unit pro forma for the Merger represented by the Public Unitholder Exchange Ratio and the distributions per MPLX Common Unit pro forma for the Merger represented by the Public Unitholder Exchange Ratio. The following table presents the results of this analysis, which indicated the Merger would be accretive to the holders of Public Unitholder Eligible Units on the basis of distributable cash flows per ANDX Common Unit and dilutive to the holders of Public Unitholder Eligible Units on the basis of distributions per ANDX Common Unit:

 

Metric

   2019      2020      2021      2022      2023  

Distributable cash flows per unit standalone

   $ 4.36      $ 4.70      $ 5.00      $ 5.25      $ 5.56  

Distributable cash flows pro forma to unaffiliated units

   $ 4.43      $ 5.01      $ 5.35      $ 5.69      $ 6.11  

Distributions per unit standalone

   $ 4.12      $ 4.12      $ 4.12      $ 4.12      $ 4.12  

Distributions pro forma to unaffiliated units

   $ 3.02      $ 3.12      $ 3.21      $ 3.31      $ 3.41  

The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying Goldman Sachs’ opinion. In arriving at its fairness determination, Goldman Sachs considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, Goldman Sachs made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses.

Goldman Sachs prepared these analyses for purposes of Goldman Sachs’ providing its opinion to the ANDX Conflicts Committee as to the fairness from a financial point of view to the holders of Public Unitholder Eligible Units, as of the date of the opinion, of the Public Unitholder Exchange Ratio pursuant to the Merger Agreement. These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of ANDX, MPLX, Goldman Sachs or any other person assumes responsibility if future results are materially different from those forecast.

The applicable merger consideration was determined through arm’s-length negotiations between the ANDX Conflicts Committee, the MPLX Conflicts Committee and MPC and was approved by the ANDX Board. Goldman Sachs provided advice to the ANDX Conflicts Committee during these negotiations. Goldman Sachs did not, however, recommend any specific exchange ratio or amount of consideration to ANDX GP or the ANDX Board or that any specific exchange ratio or amount of consideration constituted the only appropriate exchange ratio and/or amount of consideration for the transaction.

As described above, Goldman Sachs’ opinion to the ANDX Conflicts Committee was one of many factors taken into consideration by the ANDX Conflicts Committee in making its determination to approve the Merger Agreement. The foregoing summary does not purport to be a complete description of the analyses performed by Goldman Sachs in connection with the fairness opinion and is qualified in its entirety by reference to the written opinion of Goldman Sachs attached as Annex B to this consent statement/prospectus.

Goldman Sachs and its affiliates are engaged in advisory, underwriting and financing, principal investing, sales and trading, research, investment management and other financial and non-financial activities and services for various persons and entities. Goldman Sachs and its affiliates and employees, and funds or other entities they manage or in which they invest or have other economic interests or with which they co-invest, may at any time

 

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purchase, sell, hold or vote long or short positions and investments in securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments of ANDX, MPLX, any of their respective affiliates and third parties, including MPC, an affiliate of ANDX and MPLX, and its affiliates, or any currency or commodity that may be involved in the Merger. Goldman Sachs acted as financial advisor to the ANDX Conflicts Committee in connection with, and participated in certain of the negotiations leading to, the transaction contemplated by the Merger Agreement. Goldman Sachs has provided certain financial advisory and/or underwriting services to ANDX and/or its affiliates from time to time for which the Investment Banking Division of Goldman Sachs has received, and may receive, compensation, including having acted as financial advisor to Andeavor, an affiliate of ANDX, in connection with the merger of ANDX and WNRL and the buy-in of ANDX’s incentive distribution rights in October 2017; as joint bookrunner with respect to the public offering of 3.500% Senior Notes due 2022, 4.250% Senior Notes due 2027 and 5.200% Senior Notes due 2047 (aggregate principal amount $1,750,000,000) by ANDX and Tesoro Logistics Finance Corp., an affiliate of ANDX, in November 2017; as joint bookrunner with respect to the public offering of 6.875% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (aggregate principal amount $600,000,000) by ANDX in November 2017; as joint bookrunner with respect to the public offering of 3.800% Senior Notes due 2028 and 4.500% Senior Notes due 2048 (aggregate principal amount $1,000,000,000) by ANDX in December 2017; and as financial advisor to Andeavor in connection with its merger with MPC in October 2018. During the two-year period ended May 7, 2019, Goldman Sachs has recognized compensation for financial advisory and/or underwriting services provided by its Investment Banking Division to ANDX and/or its affiliates of approximately $88.9 million. Goldman Sachs also has provided certain financial advisory and/or underwriting services to MPLX and/or its affiliates from time to time for which the Investment Banking Division of Goldman Sachs has received, and may receive, compensation, including having acted as joint bookrunner with respect to the public offering of 3.375% Senior Notes due 2023, 4.000% Senior Notes due 2028 4.500% Senior Notes due 2038, 4.700% Senior Notes due 2048 and 4.900% Senior Notes due 2058 (aggregate principal amount $5,500,000,000) by MPLX in February 2018. During the two-year period ended May 7, 2019, Goldman Sachs has recognized compensation for financial advisory and/or underwriting services provided by its Investment Banking Division to MPLX and/or its affiliates of approximately $0.9 million. Goldman Sachs may also in the future provide financial advisory and/or underwriting services to ANDX, MPLX and their respective affiliates, for which the Investment Banking Division of Goldman Sachs may receive compensation.

The ANDX Conflicts Committee selected Goldman Sachs as its financial advisor because it is an internationally recognized investment banking firm that has substantial experience in transactions similar to the Merger. Pursuant to a letter agreement dated December 27, 2018 the ANDX Conflicts Committee engaged Goldman Sachs to act as its financial advisor in connection with the contemplated transaction. The engagement letter between the ANDX Conflicts Committee and Goldman Sachs provides for a transaction fee of $4,000,000, $250,000 of which became payable upon the receipt by the ANDX Conflicts Committee of MPLX’s initial acquisition proposal, and the remainder of which is contingent upon consummation of the Merger. Goldman Sachs may receive an additional fee of up to $2,500,000 at the Conflict Committee’s sole discretion. In addition, ANDX GP has agreed to reimburse Goldman Sachs for certain of its expenses, including attorneys’ fees and disbursements, and to indemnify Goldman Sachs and related persons against various liabilities, including certain liabilities under the federal securities laws.

Unaudited Forecasted Financial Information

ANDX and MPLX each prepared unaudited forecasted financial information for the years 2019 through 2023 for each respective entity on a standalone basis. The unaudited forecasted financial information does not give effect to the Merger, including any anticipated synergies or their related costs or expenses. The unaudited forecasted financial information was prepared separately by each of the partnerships using, in some cases, different assumptions, and is not intended to be added together. Adding the unaudited forecasted financial information together for the two partnerships is not intended to represent the results the combined partnership will achieve if the Merger is completed and is not intended to represent forecasted financial information for the combined partnership if the Merger is completed. Neither MPLX nor ANDX, as a matter of course, makes public

 

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long-term projections as to future earnings or other results due to, among other reasons, the uncertainty of the underlying assumptions and estimates. However, the unaudited forecasted financial information was made available to the MPLX Conflicts Committee, the ANDX Conflicts Committee, MPC, and/or Goldman Sachs in connection with the evaluation of the Merger. The inclusion of the unaudited forecasted financial information set forth below should not be regarded as an indication that any of MPLX, ANDX, MPC, Goldman Sachs or any other recipient of this information considered, or now considers, it to be necessarily predictive of actual future results. Readers of this document are cautioned not to place undue reliance on the unaudited forecasted financial information.

The unaudited forecasted financial information was, in general, prepared solely for internal use and is subjective in many respects. As a result, there can be no assurance that the forecasted results will be realized or that actual results will not be significantly higher or lower than estimated. Since the unaudited forecasted financial information covers multiple years, such information by its nature becomes less predictive with each successive year. The estimates and assumptions underlying the unaudited forecasted financial information involve judgments with respect to, among other things, future economic, competitive, regulatory and financial market conditions which may not materialize and that are inherently subject to significant uncertainties and contingencies, all of which are difficult to predict and many of which are beyond the control of MPLX, ANDX and/or MPC and will be beyond the control of the combined entity. ANDX Unitholders are urged to review the SEC filings of MPLX and ANDX for a description of risk factors with respect to the respective businesses of MPLX and ANDX. See the sections entitled “Cautionary Statement Regarding Forward-Looking Statements” and “Where You Can Find More Information” beginning on pages 26 and 172, respectively. The unaudited forecasted financial information was not prepared with a view toward public disclosure, nor was it prepared with a view toward compliance with published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information but, in the view of each of MPLX’s and ANDX’s management, as applicable, was prepared on a reasonable basis, reflected the best available estimates and judgments as of the date of preparation, and presents, to the best of management’s knowledge and belief, the expected course of action and the expected future financial performance of MPLX and ANDX, as applicable. However, this information is not fact and should not be relied upon as being necessarily indicative of future results, and readers of this consent statement/prospectus are cautioned not to place undue reliance on the unaudited forecasted financial information. The unaudited forecasted financial information included in this document has been prepared by, and is the responsibility of MPLX’s and ANDX’s management. None of the independent accountants of MPLX or ANDX nor any other independent accountants, have audited, reviewed, examined, compiled or applied agreed-upon procedures with respect to the accompanying unaudited forecasted financial information and, accordingly, the independent accountants do not express an opinion or any other form of assurance with respect thereto.

The PricewaterhouseCoopers LLP report incorporated by reference in this consent statement/prospectus relates to MPLX’s previously issued financial statements. The Ernst & Young LLP report incorporated by reference in this consent statement/prospectus relates to ANDX’s previously issued financial statements. None of the foregoing reports extend to the unaudited forecasted financial information and should not be read to do so.

NEITHER MPLX NOR ANDX HAVE UPDATED OR INTEND TO UPDATE OR OTHERWISE REVISE THE UNAUDITED FORECASTED FINANCIAL INFORMATION TO REFLECT CIRCUMSTANCES EXISTING AFTER THE DATE WHEN MADE OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS, EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING SUCH PROSPECTIVE FINANCIAL INFORMATION ARE NO LONGER APPROPRIATE.

 

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ANDX. The following table presents select unaudited forecasted financial information of ANDX for fiscal year 2019 through fiscal year 2023 prepared by management of ANDX GP, which is referred to as the ANDX unaudited forecasted financial information:

Distributable Cash Flow Summary

 

(dollars in millions, other than per unit)    2019E     2020E     2021E     2022E     2023E  

EBITDA(1)

   $ 1,435     $ 1,550     $ 1,663     $ 1,766     $ 1,884  

Distributable Cash Flow(2)

     1,111       1,195       1,267       1,330       1,407  

DCF / LP Unit(3)

     4.36       4.70       5.00       5.25       5.57  

DCF / LP Unit year-over-year growth

     11.1     7.9     6.2     5.1     6.0

Distribution per ANDX Common Unit (earned basis)

     4.12       4.12       4.12       4.12       4.12  

Distribution per ANDX Common Unit year-over-year growth

     0     0     0     0     0

Total net capital expenditures

     696     841     985       874     868  

Growth capital expenditures

     604       743       881       763       750  

Net maintenance capital expenditures (including capitalized interest)

     92       98       104       111       118  

 

(1)

EBITDA, which is defined as net earnings plus depreciation and amortization expense, interest and financing costs and income tax expense, is a non-GAAP financial measure as it excludes amounts included in net earnings, the most directly comparable measure calculated in accordance with GAAP. This measure should not be considered as an alternative to net earnings or other measures derived in accordance with GAAP.

(2)

Distributable cash flow is a non-GAAP financial measure. Amounts in this line are presented before distributions in respect of ANDX Series A Preferred Units.

(3)

DCF in this table refers to distributable cash flow, which is a non-GAAP financial measure. Amounts in this line reflect DCF per ANDX Common Unit.

The ANDX unaudited forecasted financial information is based on various assumptions, including the following principal assumptions:

 

   

It is assumed that ANDX will continue as a standalone entity;

 

   

There is assumed an average $750 million growth capital spend in 2019E-2023E, with organic growth capital in 2020E-2023E capped at $413 million with a 12-month EBITDA lag at a 7x EBITDA multiple, and the remainder of capital expenditures for acquisitions and dropdowns at a 9x multiple starting mid-year;

 

   

There is assumed that the ANDX Series A Preferred Units remain outstanding, with $41 million of annual distributions paid for each of 2019E through 2023E;

 

   

There is assumed no increase in ANDX Common Units outstanding eligible for distributions; and

 

   

There is assumed to be no increase in per unit distributions or aggregate cash distributions on the ANDX Common Units.

The estimates and assumptions underlying the ANDX unaudited forecasted financial information are inherently uncertain and, though considered reasonable by ANDX GP as of the date of the preparation of such unaudited forecasted financial information, are subject to a wide variety of significant business, economic, regulatory and competitive risks and uncertainties that could cause actual results to differ materially from those contained in the unaudited forecasted financial information, including, among other things, the matters described in the sections entitled “Cautionary Statement Regarding Forward-Looking Statements” and “Risk Factors” beginning on pages 26 and 28, respectively. Accordingly, there can be no assurance that the unaudited forecasted financial information is necessarily predictive of the actual future performance of ANDX, or that actual results will not differ materially from those presented in the ANDX unaudited forecasted financial information. Inclusion of the ANDX unaudited forecasted financial information in this consent statement/prospectus should not be regarded as a representation by any person that the results contained in the ANDX unaudited forecasted financial information will be achieved.

 

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The ANDX unaudited forecasted financial information is not included in this consent statement/prospectus in order to induce any ANDX unitholder to consent to the Merger.

MPLX. The following table presents select unaudited forecasted financial information of MPLX for fiscal year 2019 through fiscal year 2023 prepared by management of MPLX GP, which is referred to as the MPLX unaudited forecasted financial information:

Distributable Cash Flow Summary

 

(dollars in millions, other than per unit)    2019E     2020E     2021E     2022E     2023E  

Adjusted EBITDA(1)

   $ 3,920     $ 4,420     $ 4,650     $ 4,944     $ 5,267  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Distributable Cash Flow(2)

   $ 3,108     $ 3,548     $ 3,776     $ 4,031     $ 4,330  

DCF / LP unit(3)

     3.8110       4.3612       4.6453       4.9637       5.3364  

DCF / LP unit year-over-year growth

     8     14     6     7     7

Distribution per MPLX Common Unit (earned basis)

     2.665       2.745       2.826       2.912       3.002  

Distribution per MPLX Common Unit year-over-year growth

     5     3     3     3     3

Total capital expenditures

     2,753       2,190       2,177       2,179       2,181  

Organic growth capital expenditures

     2,583       2,000       2,000       2,000       2,000  

Maintenance capital expenditures (including capitalized interest)

     170       191       180       183       187  

 

(1)

Non-GAAP financial measure. Adjusted EBITDA is net income adjusted for (i) depreciation and amortization; (ii) provision for income taxes; (iii) amortization of deferred financing costs; (iv) non-cash equity-based compensation; (v) net interest and other financial costs; (vi) income from equity method investments; (vii) distributions and adjustments related to equity method investments; (viii) unrealized derivative gains and losses; and (ix) other adjustments as deemed necessary.

(2)

Distributable cash flow is a non-GAAP financial measure. Amounts in this line are presented before distributions in respect of MPLX Series A Preferred Units.

(3)

DCF in this table refers to distributable cash flow, which is a non-GAAP financial measure. Amounts in this line reflect DCF per MPLX Common Unit.

The MPLX unaudited forecasted financial information is based on various assumptions, including the following principal assumptions:

 

   

There was assumed to be $2.583 billion in organic growth capital expenditures for 2019E based on maximum spending authorized by the MPLX Board, and then $2.0 billion in each year thereafter through 2023E;

 

   

There was assumed to be no acquisitions or annual dropdown transactions from MPC or its affiliates; and

 

   

There was assumed 30.8 million of MPLX Series A Preferred Units to remain outstanding without conversion.

The estimates and assumptions underlying the MPLX unaudited forecasted financial information are inherently uncertain and, though considered reasonable by the management of MPLX GP as of the date of the preparation of such unaudited forecasted financial information, are subject to a wide variety of significant business, economic, regulatory and competitive risks and uncertainties that could cause actual results to differ materially from those contained in the unaudited forecasted financial information, including, among other things, the matters described in the sections entitled “Cautionary Statement Regarding Forward-Looking Statements” and “Risk Factors” beginning on pages 26 and 28, respectively. The unaudited forecasted financial information included in this document has been prepared by, and is the responsibility of, MPLX’s management. PricewaterhouseCoopers LLP has not audited, reviewed, examined, compiled nor applied agreed-upon procedures with respect to the accompanying unaudited forecasted financial information and, accordingly, PricewaterhouseCoopers LLP does not express an opinion or any other form of assurance with respect thereto. The unaudited forecasted financial

 

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information was not prepared with a view toward compliance with published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation or presentation of prospective financial information. Accordingly, there can be no assurance that the forecasted results are necessarily predictive of the actual future performance of MPLX, or that actual results will not differ materially from those presented in the MPLX unaudited forecasted financial information. Inclusion of the MPLX unaudited forecasted financial information in this consent statement/prospectus should not be regarded as a representation by any person that the results contained in the MPLX unaudited forecasted financial information will be achieved. The PricewaterhouseCoopers LLP report incorporated by reference in this consent statement/prospectus relates to MPLX’s previously issued financial statements. It does not extend to the unaudited forecasted financial information and should not be read to do so.

Synergies Forecast

In connection with the ANDX and MPLX standalone forecasts, management of MPC also projected $25.0 million of annual cost synergies to result from the Merger.

The MPLX unaudited forecasted financial information is not included in this consent statement/prospectus in order to induce any ANDX unitholder to consent to the Merger.

Recommendation of the MPLX Board

The MPLX Conflicts Committee, with the advice and assistance of its financial and legal advisors, negotiated, evaluated, and, at a meeting held on May 7, 2019, unanimously approved the Merger Agreement and the consummation of the transactions contemplated thereby, including the Merger.

In reaching its decision to approve the Merger Agreement and the consummation of the transactions contemplated thereby, including the Merger, and to recommend that the MPLX Board approve the Merger Agreement and the consummation of the transactions contemplated thereby, including the Merger (the “MPLX Conflicts Committee Recommendation”), the MPLX Conflicts Committee consulted extensively with its financial and legal advisors and MPLX’s management. After such discussions, the MPLX Conflicts Committee unanimously determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are not adverse to the best interests of MPLX and its subsidiaries treated as a consolidated entity and the holders of MPLX Common Units (other than MPLX GP and its affiliates, including MPC).

Upon receipt of the MPLX Conflicts Committee Recommendation, the MPLX Board unanimously determined that the Merger Agreement, the other Transaction Documents and the transactions contemplated thereby, including the Merger are not adverse to the best interests of MPLX and its subsidiaries treated as a consolidated entity, and approved and declared the Merger Agreement, the other Transaction Documents to which MPLX and MPLX GP are a party and the transactions contemplated thereby, including the Merger, advisable.

Reasons of the MPLX Board for the Merger

The MPLX Board’s decision to approve the Merger Agreement and the transactions contemplated thereby, including the Merger, was based on a number of factors, including the following (which are not necessarily presented in order of relative importance):

 

   

MPLX’s expected business, assets, financial condition, results of operations, business plan and prospects following the completion of the Merger, including the expected pro forma effect of the Merger on the combined partnership.

 

   

The Merger is expected to be accretive to MPLX on a DCF basis.

 

   

MPLX management’s identification of synergies associated with the Merger, and MPLX’s past record of successfully integrating acquisitions and of realizing the projected financial goals and benefits of acquisitions.

 

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That the combination will create a larger, more diversified industry-leading midstream energy infrastructure and logistics company with enhanced cash flow stability and will enhance long-term growth potential and opportunities for MPLX in comparison to MPLX continuing as a standalone entity.

 

   

The combined pro forma asset footprint of MPLX and ANDX offers significant opportunities to diversify business and enhance margins.

 

   

That the increased size, scale, and resources of MPLX following the Merger would facilitate continued investments by MPLX in growth initiatives and thereby create additional long-term MPLX Unitholder value.

 

   

The expectation that, following the Merger, MPLX would have a stronger financial and credit profile, given the more diverse asset base and stronger balance sheet of the combined partnership, which may decrease borrowing costs for the combined partnership and strengthen its investment grade credit profile.

 

   

The attractiveness of the Merger to MPLX in comparison to other acquisition opportunities reasonably available to MPLX, including the belief that MPLX and ANDX share similar approaches to employing an integrated business model for midstream infrastructure and logistics.

 

   

The MPLX Conflicts Committee’s knowledge of, and discussions with MPLX management regarding, MPLX’s business operations, financial condition, earnings and prospects, and its knowledge of ANDX’s business, operations, financial condition, earnings and prospects, taking into account ANDX’s publicly filed information and the results of MPLX’s due diligence investigation of ANDX.

 

   

That MPC, which beneficially owned approximately 64% of ANDX Common Units as of May 7, 2019, was willing to support the Merger by accepting a lower exchange ratio than ANDX Public Unitholders.

 

   

The significant overlap between the unitholder base of MPLX and the unitholder base of ANDX and the perceived similarity in corporate cultures, which would facilitate the integration of ANDX into the MPLX corporate group.

 

   

The terms and conditions of the Merger were determined through arm’s-length negotiations among MPC, the MPLX Conflicts Committee and the ANDX Conflicts Committee and their respective representatives and advisors.

 

   

The MPLX Conflicts Committee retained independent financial and legal advisors with knowledge and experience with respect to public merger and acquisition transactions, MPLX’s and ANDX’s industry generally, and MPLX and ANDX particularly, as well as substantial experience advising publicly traded limited partnerships and their affiliates with respect to transactions similar to the proposed transaction.

 

   

That the combined partnership would continue to be led by the strong, experienced MPLX management team and that seven current ANDX directors, including the chairman, are also directors of MPLX and will remain directors of MPLX post-Merger, which would provide valuable expertise and experience and in-depth familiarity with ANDX to the MPLX Board.

 

   

The review by the MPLX Conflicts Committee with its legal and financial advisors of the structure of the proposed Merger and the financial and other terms of the Merger Agreement, including each party’s representations, warranties and covenants, the conditions to each party’s obligations and the termination provisions, as well as the likelihood of consummation of the proposed Merger and the contractual obligation of MPC to support the Merger.

 

   

The Merger will eliminate potential conflicts between ANDX and MPLX and allow MPLX to capture additional midstream growth opportunities involving MPC.

 

   

The results of the due diligence investigation of ANDX conducted by advisors to the MPLX Conflicts Committee were consistent with the expectations of the MPLX Conflicts Committee with respect to the strategic and financial benefits of the Merger.

 

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The MPLX Conflicts Committee had no obligation to recommend any transaction, including the proposal put forth by MPC.

 

   

That the Public Unitholder Exchange Ratio and the Affiliated Exchange Ratio is fixed and will not fluctuate in the event that the market price of ANDX Common Units increases relative to the market price of MPLX Common Units between the date of the Merger Agreement and the completion of the Merger.

 

   

The fact that there are limited circumstances in which the ANDX Conflicts Committee may terminate the Merger Agreement.

The MPLX Board considered all of these factors as a whole and unanimously concluded that they supported a determination to approve the Merger Agreement, the Merger and the other transactions contemplated thereby. The foregoing discussion of the information and factors considered by the MPLX Board is not exhaustive. In view of the wide variety of factors considered by the MPLX Board in connection with its evaluation of the Merger and the complexity of these matters, the MPLX Board did not consider it practical to, nor did it attempt to, quantify, rank or otherwise assign relative weights to the specific factors that it considered in reaching its decision. In considering the factors described above and any other factors, individual members of the MPLX Board may have viewed factors differently or given different weight or merit to different factors.

The foregoing discussion of the information and factors considered by the MPLX Board is forward-looking in nature. This information should be read in light of the factors described in the section entitled “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 26.

Regulatory Approvals

In connection with the Merger, MPLX intends to make all required filings under the Securities Act and the Exchange Act, as well as any required filings or applications with the NYSE. MPLX and ANDX are unaware of any other requirement for the filing of information with, or the obtaining of the approval of, governmental authorities in any jurisdiction that is applicable to the Merger.

The Merger is not reportable under the HSR Act, and therefore, no filings with respect to the Merger were required with the FTC or the DOJ.

MPC’s Ownership Interest In and Control of ANDX and MPLX

ANDX unitholders should be aware that each of ANDX and MPLX is controlled by MPC through MPC’s indirect 100% ownership of ANDX GP, which owns 100% of the non-economic general partner interest in ANDX, and MPLX GP, which owns 100% of the non-economic general partner interest in MPLX. As a result, MPC appoints the members of both the ANDX Board and the MPLX Board, in each case a majority of whom are affiliated with MPC and its affiliates, and thereby could be seen as controlling all of ANDX’s and MPLX’s decisions, other than those involving certain conflicts of interest with MPC or that require an affirmative vote of holders of the limited partner interests in ANDX or MPLX pursuant to and in the percentages specified by the ANDX Partnership Agreement or the MPLX Partnership Agreement, as applicable. In addition, as of the Record Date, MPC indirectly owned (i) approximately 64% of the outstanding ANDX Common Units and (ii) approximately 64% of the outstanding MPLX Common Units. Following the closing of the Merger, MPC will indirectly own approximately 63% of the outstanding MPLX Common Units, not including any MPLX Common Units issuable upon conversion of the MPLX Series A Preferred Units or in respect of Converted MPLX Phantom Units, and all of the MPLX TexNew Mex Units and the MPLX Special Limited Partner Interest and continue to indirectly own 100% of the membership interests of ANDX GP and MPLX GP.

Certain directors and executive officers associated with MPC have a relationship with ANDX and MPLX. Gary R. Heminger is Chairman of the Board and Chief Executive Officer of MPC, Chairman of the MPLX Board

 

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and Chief Executive Officer of MPLX GP and Chairman of the ANDX Board and Chief Executive Officer of ANDX GP. Timothy T. Griffith is Senior Vice President and Chief Financial Officer of MPC and a member of the MPLX Board and the ANDX Board. Donald C. Templin is President, Refining, Marketing and Supply of MPC and a member of the MPLX Board and the ANDX Board. Gregory J. Goff is Executive Vice Chairman of MPC and a member of the MPLX Board and the ANDX Board. Certain of the foregoing persons also serve as officers, directors and/or members of management of other affiliates of MPC.

Interests of Directors and Executive Officers of ANDX GP in the Merger

In considering the recommendation of the ANDX Conflicts Committee, ANDX Common Unitholders should be aware that the directors and executive officers of ANDX GP may have interests in the Merger and related transactions, that are different from, or in addition to, the interests of ANDX Unitholders generally. With respect to at least some of the directors and executive officers, these interests include, but are not limited to, positions as directors or officers of MPC, MPLX GP and their respective affiliates; the treatment in the Merger of ANDX Phantom Units held by ANDX GP executive officers and directors; equity holdings in MPC or MPLX; and rights to ongoing indemnification and insurance coverage. These interests are described in more detail below, and certain of them are quantified in the narrative and tabular disclosure included in the section entitled “—Merger-Related Compensation” beginning on page 77.

The members of the ANDX Conflicts Committee were aware of and considered these interests, among other matters, in evaluating and negotiating the Merger Agreement, in approving the Merger and in determining to recommend to ANDX Common Unitholders that they consent to the adoption of the Merger Agreement. ANDX Common Unitholders should take these interests into account in deciding whether to consent to the adoption of the Merger Agreement.

The directors and executive officers of MPLX GP, in their capacity as such, do not have interests in the Merger and related transactions that are different from, or in addition to, the interests of MPLX Unitholders generally.

Treatment of ANDX Phantom Units and ANDX Director Phantom Units

Assumption and Potential Double-Trigger Acceleration of ANDX Phantom Units

As described below in the section titled “The Merger Agreement—Treatment of ANDX Phantom Units in the Merger” beginning on page 82, any ANDX Phantom Units, other than any ANDX Director Phantom Unit, will be assumed by MPLX and converted into phantom units denominated in MPLX Common Units. Pursuant to their pre-existing terms, these awards, with the exception of the March 1, 2019 ANDX Phantom Units award to Don J. Sorenson (the “2019 Sorenson ANDX Phantom Units Award”), will vest upon a qualifying termination of employment of the holder within two years following the October 1, 2018, closing date of MPC’s acquisition of Andeavor, which transaction constituted a change in control of ANDX (the “Prior CIC”). The 2019 Sorenson ANDX Phantom Units Award does not provide for the full vesting of the award upon a qualified termination of employment of the holder within two years of the Prior CIC. Instead, such award provides for full vesting of the award upon a qualified termination of Mr. Sorenson within two years of a change in control of MPC (“MPC CIC”).

 

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The table below sets forth the number of ANDX Phantom Units held by ANDX GP’s current executive officers as of May 21, 2019 (the assumed date of the closing of the Merger solely for purposes of this “Interests of Directors and Executive Officers of ANDX GP in the Merger” disclosure), which will be assumed by MPLX and will vest upon the earlier of their respective vesting dates or a qualifying termination of employment on the basis of the Prior CIC or an MPC CIC, as applicable. The estimate of the intrinsic value of such awards (on a pre-tax basis) is based on a price per unit of $35.11, which is the average closing market price of ANDX Common Units over the first five business days following the public announcement of the Merger.

 

Executive Officers

   Number
of
ANDX
Phantom
Units (#)
     Estimated
Intrinsic
Value $
 

Don J. Sorensen(1)

     27,540        966,929  

Gregory J. Goff(2)

     129,902        4,560,859  

 

(1)

Mr. Sorensen’s unvested ANDX Phantom Units also have accrued distribution equivalents of $119,342. 11,338 of the 27,540 ANDX Phantom Units are subject to the terms of the 2019 Sorenson ANDX Phantom Units Award.

(2)

Although Mr. Goff is no longer an executive officer of ANDX GP, he received his ANDX Phantom Units as an executive officer. His ANDX Phantom Units will be treated the same as the ANDX Phantom Units for other executive officers of ANDX GP. Mr. Goff’s unvested ANDX Phantom Units also have accrued distribution equivalents of $877,772.

As of May 21, 2019, none of the other executive officers of ANDX GP since January 1, 2018, which include Gary R. Heminger, Suzanne Gagle, Blane W. Peery, D. Andrew Woodward, Steven M. Sterin, Kim K.W. Rucker, and Stephan E. Tompsett, hold any ANDX Phantom Units and none is entitled to any compensation that is based on or otherwise relates to the Merger.

Cancellation of Awards Held by Directors of ANDX GP

As described below in the section titled “The Merger Agreement—Treatment of ANDX Phantom Units in the Merger” beginning on page 82, any ANDX Director Phantom Unit will automatically be canceled at the effective time of the Merger, and the holder of any ANDX Director Phantom Unit will be entitled to a cash payment equal to (i) the number of ANDX Common Units subject to the ANDX Director Phantom Unit immediately prior to the effective time of the Merger, whether or not vested, multiplied by (ii) the product of (A) the Public Unitholder Exchange Ratio and (B) the average of the volume weighted average price per unit of MPLX Common Units on the NYSE (as reported by Bloomberg L.P. or, if not reported therein, in another authoritative source mutually selected by MPLX and ANDX) on each of the ten consecutive trading days ending with the complete trading day immediately prior to the Closing Date.

 

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The table below sets forth the number of ANDX Director Phantom Units held by non-executive members of the ANDX Board as of May 21, 2019 (the assumed date of the closing of the Merger solely for purposes of this “Interests of Directors and Executive Officers of ANDX General Partner in the Merger” disclosure), which will be automatically canceled at the effective time of the Merger in exchange for the cash payment described above. The estimate of the intrinsic value of such awards (on a pre-tax basis) is based on a price per unit of $35.11, which is the average closing market price of ANDX Common Units over the first five business days following the public announcement of the Merger.

 

Non-Executive Directors

   Number
of
ANDX
Director
Phantom
Units (#)
(1)
     Estimated
Intrinsic
Value $
 

Sigmund L. Cornelius

     1,658        58,212  

Ruth I. Dreessen

     1,658        58,212  

James H. Lamanna

     1,658        58,212  

Frank M. Semple

     2,114        74,223  

 

(1)

Mr. Semple also has accrued distribution equivalents with respect to 456 unvested ANDX Director Phantom Units in the amount of $939.36.

See the section entitled “—Assumption and Potential Double-Trigger Acceleration of ANDX Phantom Units” above for the treatment of the ANDX Phantom Units held by Mr. Goff. Mr. Goff does not hold any ANDX Director Phantom Units. None of the other non-executive directors of ANDX since January 1, 2018, which include Pamela K.M. Beall, Raymond J. Bromark, Timothy T. Griffith, Michael J. Hennigan, Thomas C. O’Connor, Jeff A. Stevens, Donald C. Templin, and Michael Wiley, hold any ANDX Director Phantom Units and none is entitled to any compensation that is based on or otherwise relates to the Merger.

 

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Economic Interests of Directors and Executive Officers of ANDX GP in the Other Parties to the Transaction

As described above under the section entitled “—MPC’s Ownership Interest In and Control of ANDX and MPLX,” certain directors and executive officers of ANDX GP have a relationship with one or more of MPC and MPLX GP, including by serving as a director and/or officer of such entities. Through their relationships with these entities and otherwise, certain of these directors and executive officers of ANDX GP hold equity interests in MPC, MPLX or both. In certain circumstances these equity interests are more valuable than the equity interests in ANDX held by such director or executive officer of ANDX GP. Holding these equity interests in MPC or MPLX, each of which is a counterparty with economic interests adverse to ANDX in certain of the transactions contemplated by the Merger Agreement, gives such directors and executive officers of ANDX GP interests in the Merger and related transactions that are different from the interests of ANDX unitholders generally. Set forth in the table below is the number of: (i) shares of MPC common stock, (ii) MPLX Common Units, and (iii) ANDX Common Units beneficially owned by each of the current directors and executive officers of ANDX GP as of May 21, 2019.

 

     MPC      MPLX     ANDX  

Name

   Common
Stock
Beneficially
Owned
     Common
Units
Beneficially
Owned
    Common
Units
Beneficially
Owned
 

Pamela K.M. Beall

     127,328 (a)       36,648 (h)      —    

Sigmund L. Cornelius

     —          —         5,002 (l) 

Ruth I. Dreessen

     —          —         3,694 (l) 

Suzanne Gagle

     89,994 (a)       22,001 (h)      —    

Gregory J. Goff

     2,066,697 (a)(b)(c)       48,873 (h)      300,378 (c) 

Timothy T. Griffith

     285,554 (a)       36,846 (h)      —    

Gary R. Heminger

     2,898,865 (a)(d)       263,871 (i)(j)      —    

Michael J. Hennigan

     42,431 (a)       144,136 (h)      —    

James H. Lamanna

     —          —         16,660 (l) 

Blane W. Peery

     38,486 (e)       —         —    

Frank M. Semple

     4,749 (f)       585,093 (b)(j)(k)      2,114 (l) 

Don J. Sorensen

     34,616 (g)       —         37,160 (g) 

Donald C. Templin

     593,577 (a)(b)       91,155 (b)(h)      —    

 

(a)

Includes all MPC stock options exercisable within 60 days of May 21, 2019 as follows: Ms. Beall, 83,440; Ms. Gagle, 71,357; Mr. Goff, 283,329; Mr. Griffith, 233,800; Mr. Heminger, 2,311,513; Mr. Hennigan, 10,075; and Mr. Templin, 495,395. This includes 111,052 stock options exercisable but not in the money as of May 21, 2019.

(b)

Includes shares of MPC common stock or MPLX Common Units, as applicable, held by or with spouse, with spouse as co-trustee, or by trust for the benefit of spouse.

(c)

MPC total includes (i) 483,554 MPC restricted stock units converted from previously outstanding Andeavor awards, a portion of which may be forfeited under certain conditions, (ii) 226,383 shares of MPC common stock held by G Goff Foundation Inc., for which Mr. Goff acts as trustee with shared voting and investment power, and (iii) 38,875 shares of MPC common stock held in trust for which Mr. Goff acts as trustee with shared voting and investment power. ANDX total includes 129,902 ANDX Phantom Units, a portion of which may be forfeited under certain conditions, that will settle in ANDX Common Units.

(d)

Includes 206,202 shares of MPC common stock indirectly beneficially held in trust.

(e)

Includes 23,912 MPC restricted stock units, which were converted from previously outstanding Andeavor awards and a portion of which may be forfeited under certain conditions.

(f)

Includes MPC restricted stock unit awards, which vest upon retirement from service on the MPC Board or observer status.

(g)

MPC total includes 20,653 MPC restricted stock units converted from previously outstanding Andeavor awards, a portion of which may be forfeited under certain conditions. ANDX total includes 27,540 ANDX Phantom Units, a portion of which may be forfeited under certain conditions.

 

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(h)

Includes MPLX Phantom Unit awards, which may be forfeited under certain conditions, as follows: Ms. Beall, 10,773; Ms. Gagle; 14,122, Mr. Goff, 36,920; Mr. Griffith, 17,188; Mr. Hennigan, 129,119; Mr. Templin, 30,221.

(i)

Includes 77,852 MPLX Phantom Unit awards, which are fully vested and will settle in MPLX Common Units at the end of the applicable performance period.

(j)

Includes MPLX Common Units indirectly beneficially held in trust as follows: Mr. Heminger, 131,915; Mr. Semple, 527,517.

(k)

Includes 8,799 MPLX Phantom Unit awards, which will settle in MPLX Common Units upon retirement from service on the MPLX Board.

(l)

Includes 1,658 ANDX Phantom Units that will settle in ANDX Common Units upon the director’s retirement from service on the ANDX Board. Mr. Semple’s amount includes an additional 456 ANDX Phantom Units that will vest and settle in ANDX Common Units on October 1, 2019.

Merger-Related Compensation

This section sets forth the information required by Item 402(t) of Regulation S-K regarding the compensation of each of ANDX GP’s named executive officers that is based on or otherwise relates to the Merger and that will or may become payable to the named executive officers at the closing of the Merger or on a qualifying termination of employment upon or following the consummation of the Merger. This compensation is referred to as “golden parachute” compensation by the applicable SEC disclosure rules, and in this section we use such term to describe the Merger-related compensation payable to ANDX GP named executive officers. The “golden parachute” compensation payable to these individuals is subject to a non-binding advisory vote of ANDX unitholders. The named executive officers of MPLX GP will not receive compensation based on or otherwise relating to the Merger.

As described above, pursuant to the pre-existing terms of the award agreements granted to ANDX GP employees, awards will vest on a double-trigger basis upon a qualifying termination of the individual’s employment within two years following the date of the Prior CIC, except that with regard to the 2019 Sorenson ANDX Phantom Units Award, such award will vest on a double-trigger basis upon Mr. Sorenson’s qualifying termination of employment within two years following the date of an MPC CIC. (Because the 2019 Sorenson ANDX Phantom Units Award does not provide for payment to Mr. Sorenson in connection with the Merger, it is excluded from the table below.) Such awards are not subject to accelerated vesting on a single-trigger basis in connection with the Merger. For details on the treatment of outstanding ANDX Phantom Units, see the section titled “The Merger Agreement—Treatment of ANDX Phantom Units in the Merger” beginning on page 82.

The amounts set forth in the table below assume the following:

 

   

the closing of the Merger occurred on May 21, 2019;

 

   

the individual is terminated without “cause” immediately following the closing of the Merger; and

 

   

the per unit value of each ANDX Phantom Unit subject to accelerated vesting is $35.11, which is the average closing market price of ANDX Common Units over the first five business days following the public announcement of the Merger.

The amounts reported in the table below are estimates based on multiple assumptions that may or may not actually occur, including assumptions described in this consent statement/prospectus, and do not reflect compensation actions that may occur following the filing of this consent statement/prospectus, base compensation increases or annual equity award grants in the ordinary course prior to the effective time of the Merger. The amounts reported below also include any equity awards that may vest after May 21, 2019, but before the actual closing of the Merger. As a result, the actual amounts, if any, to be received by an ANDX GP named executive officer may differ materially from the amounts set forth below. In addition, the amounts

 

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reflected in the table below are attributable to double-trigger arrangements (i.e., the amounts are payable only in the event of a qualifying termination of the named executive officer’s employment during a specified period).

 

     Golden Parachute Compensation  

Name

   Cash
($)
     Equity
($)(2)
     Pension/
NQDC
($)
     Perquisites/
Benefits
($)
     Tax
reimbursement
($)
     Total ($)  

Gary R. Heminger(1)

     —          —          —          —          —          —    

D. Andrew Woodward(1)

     —          —          —          —          —          —    

Don J. Sorensen

     —          676,516        —          —          —          676,516  

Gregory J. Goff

     —          5,438,631        —          —          —          5,438,631  

Steven M. Sterin(1)

     —          —          —          —          —          —    

Kim K.W. Rucker(1)

     —          —          —          —          —          —    

 

(1)

As of May 21, 2019, Messrs. Heminger, Woodward, and Sterin and Ms. Rucker were not entitled to any compensation that is based on or otherwise relates to the Merger and thus will not receive any “golden parachute” compensation in connection with the Merger.

(2)

Equity. The amounts in this column include unvested ANDX Phantom Units that will vest on a double-trigger basis upon a qualifying termination of the named executive officer’s employment within two years following the date of the Prior CIC, and with respect to Mr. Sorenson, excludes his 2019 Sorenson ANDX Phantom Units Award of 11,338 ANDX Phantom Units. Such award agreements granted to Messrs. Sorensen and Goff include standard restrictive covenants, including non-competition covenants, for a period of one year following termination of employment. The following table sets forth the estimated value of the award:

 

Named Executive Officer

   Phantom
Units (#)
     Value
($)
     Distribution
equivalents
($)
 

Don J. Sorensen

     16,202        568,852        107,664  

Gregory J. Goff

     129,902        4,560,859        877,772  

Indebtedness Following the Merger

In connection with the Merger, MPLX intends to repay the indebtedness outstanding under ANDX’s existing credit facilities. In addition, MPLX may conduct an offer to exchange any and all outstanding ANDX senior notes of one or more series for MPLX senior notes having the same maturity and interest rates as the ANDX senior notes being exchanged. MPLX currently intends to finance the repayment of such indebtedness using a combination of cash on hand and drawings on MPLX’s revolving credit facility. For a discussion of the combined partnership’s indebtedness on a pro forma basis giving effect to the refinancing of existing indebtedness, see the section entitled “Selected Unaudited Pro Forma Condensed Combined Financial Data” beginning on page 21.

Indemnification and Insurance

The parties to the Merger Agreement have agreed that, from and after the effective time of the Merger, MPLX and the surviving entity in the Merger will indemnify and hold harmless (subject to certain conditions to provide advancement of expenses and applicable law), each present and former director and officer of ANDX GP, each known as an indemnified person, from and against any costs or expenses, judgments, fines, losses, claims, damages or liabilities incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of or related to matters such indemnified person’s service as a director or officer of ANDX GP or an employee of ANDX or ANDX GP or services performed by such person at the request of ANDX or ANDX GP (including acting, at the request of ANDX or ANDX GP, as a director, officer, employee, partner, manager, fiduciary or trustee of any other person) at or prior to the effective time of the Merger, whether asserted or claimed prior to, at or after the effective time of the Merger in connection with the Merger Agreement.

 

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In addition, the Merger Agreement contains certain obligations related to the purchase of directors’ and officers’ liability insurance “tail” policies with respect to matters existing or occurring at or prior to the effective time of the Merger for persons who are covered under ANDX’s or ANDX GP’s existing policies. For additional information see the section entitled “The Merger Agreement—Indemnification; Directors’ and Officers’ Insurance” beginning on page 97.

Listing of MPLX Common Units; Delisting and Deregistration of ANDX Common Units

MPLX expects to obtain approval to list the MPLX Common Units to be issued pursuant to the Merger Agreement on the NYSE, which approval is a condition to the closing of the Merger. Assuming that such approval is sought and obtained, MPLX expects the MPLX Common Units to be issued pursuant to the Merger Agreement to be quoted on the NYSE under the symbol “MPLX.”

Consent Solicitation Costs

The enclosed consent card is being solicited on behalf of the ANDX Board. In addition to solicitation by mail, ANDX GP’s directors, officers and employees may solicit consents in person, by telephone or by electronic means. These persons will not be specifically compensated for doing this.

ANDX will ask banks, brokers and other custodians, nominees and fiduciaries to forward the consent solicitation materials to the beneficial owners of shares of ANDX Common Units held of record by such nominee holders. ANDX will reimburse these nominee holders for their customary clerical and mailing expenses incurred in forwarding the consent solicitation materials to the beneficial owners.

No Dissenters’ Rights

ANDX Common Unitholders do not have appraisal rights under applicable law or contractual appraisal rights under the ANDX Partnership Agreement or the Merger Agreement.

Litigation Related to the Merger

On June 19, 2019, a purported ANDX Common Unitholder filed a complaint in the United States District Court of the Southern District of New York, captioned Max Pyziur v. Andeavor Logistics LP et al., Case No. 1:19-CV-05714 (the “Pyziur Action”). The Pyziur Action alleges that ANDX and the directors of ANDX GP disseminated a registration statement regarding the proposed Merger in violation of Section 14(a) of the Exchange Act and SEC Rule 14a-9 promulgated thereunder because it omits material information with respect to the Merger and further alleges that the directors of ANDX are liable for these violations as “controlling persons” of ANDX under Section 20(a) of the Exchange Act. The Pyziur Action seeks, among other things, to enjoin the transactions contemplated by the Merger Agreement unless ANDX discloses the allegedly material information that was allegedly omitted from the registration statement, an award of rescissory damages should the Merger be consummated, and an award of attorneys’ fees and expenses.

Additional lawsuits arising out of the Merger may be filed in the future. There can be no assurance that any of the defendants will be successful in the outcome of the pending or any potential future lawsuits. A preliminary injunction could delay or jeopardize the completion of the Merger, and an adverse judgment granting permanent injunctive relief could indefinitely enjoin the completion of the Merger. ANDX believes that the Pyziur Action is without merit and intends to defend vigorously against it and any other lawsuits challenging the Merger.

No MPLX Unitholder Approval Required

The approval and adoption of the Merger Agreement and the Merger by MPLX does not require the affirmative vote or consent of MPLX Unitholders.

Accounting Treatment of the Merger

In accordance with the guidance under ASC Topic 805: Business Combinations, the Merger will be accounted for as a reorganization of entities under common control. The assets and liabilities of ANDX transferred between entities under common control will be recorded by MPLX based on MPC’s historical cost basis as of October 1, 2018 resulting from its preliminary purchase price accounting.

 

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THE MERGER AGREEMENT

This section describes the material terms of the Merger Agreement, which was executed on May 7, 2019. The description of the Merger Agreement in this section and elsewhere in this consent statement/prospectus is qualified in its entirety by reference to the complete text of the Merger Agreement, a copy of which is attached as Annex A to this consent statement/prospectus and is incorporated by reference herein in its entirety. This summary does not purport to be complete and may not contain all of the information about the Merger Agreement that is important to you. You are encouraged to read the Merger Agreement carefully and in its entirety, because it is the legal document that governs the Merger.

Explanatory Note Regarding the Merger Agreement

The Merger Agreement and this summary are included solely to provide you with information regarding the terms of the Merger Agreement. Factual disclosures about MPLX, ANDX, or any of their respective subsidiaries or affiliates contained in this consent statement/prospectus or in MPLX’s or ANDX’s public reports filed with the SEC may supplement, update or modify the factual disclosures about MPLX or ANDX, as applicable, contained in the Merger Agreement. The representations, warranties and covenants made in the Merger Agreement by MPLX, MPLX GP, ANDX, ANDX GP and Merger Sub were made solely for the purposes of the Merger Agreement and as of specific dates and were qualified and subject to important limitations agreed to by MPLX, MPLX GP, ANDX, ANDX GP and Merger Sub in connection with negotiating the terms of the Merger Agreement. In particular, in your review of the representations and warranties contained in the Merger Agreement and described in this summary, it is important to bear in mind that the representations and warranties were negotiated with the principal purposes of establishing the circumstances in which a party to the Merger Agreement may have the right not to complete the Merger if the representations and warranties of the other party prove to be untrue due to a change in circumstance or otherwise, and allocating risk between the parties to the Merger Agreement, rather than establishing matters as facts. The representations and warranties may also be subject to a contractual standard of materiality different from those generally applicable to unitholders and reports and documents filed with the SEC, and in some cases were qualified by the matters contained in the respective disclosure letters that MPLX and ANDX delivered to each other in connection with the Merger Agreement, which disclosures were not reflected in the Merger Agreement. Moreover, information concerning the subject matter of the representations and warranties, which do not purport to be accurate as of the date of this consent statement/prospectus, may have changed since the date of the Merger Agreement. Investors should not rely on the Merger Agreement representations, warranties, covenants or any descriptions thereof as characterizations of the actual state of facts of MPLX, MPLX GP, ANDX, ANDX GP, Merger Sub or any of their respective subsidiaries or affiliates.

The Merger

The Merger Agreement provides that, upon the terms and subject to the conditions in the Merger Agreement, and in accordance with the DRULPA, and the Delaware Limited Liability Company Act, as amended, at the effective time of the Merger, Merger Sub will merge with and into ANDX. As a result of the Merger, the separate existence of Merger Sub will cease, and ANDX will continue as the surviving entity in the Merger and a wholly owned subsidiary of MPLX.

Closing and Effective Time of the Merger

Unless otherwise mutually agreed to in writing by each of the parties, the closing of the Merger will take place on the second business day following the day on which the last to be satisfied or waived of the conditions to completion of the Merger, described in the section entitled “—Conditions to the Completion of the Merger” beginning on page 94, has been satisfied or waived (other than those conditions which by their nature are to be satisfied at the closing of the Merger, but subject to the satisfaction or waiver of those conditions).

 

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Assuming timely satisfaction of the necessary closing conditions, the parties currently expect the closing of the Merger to occur in the second half of 2019. The Merger shall become effective at the time when the certificate of merger for the Merger has been duly filed with the secretary of state of the State of Delaware or at such later time as may be agreed by the parties in writing and specified in the certificate of merger for the Merger.

Merger Consideration

As a result of the Merger, each Public Unitholder Eligible Unit will be converted into the right to receive Public Unitholder Merger Consideration and each MPLX Common Unit so issued will be validly issued, fully paid and non-assessable (except to the extent such non-assessability may be affected by Sections 17-303, 17-607 and 17-804 of the DRULPA).

As a result of the Merger, each Affiliated Unitholder Eligible Unit will be converted into the right to receive Affiliated Unitholder Merger Consideration and each MPLX Common Unit so issued will be validly issued, fully paid and non-assessable (except to the extent such non-assessability may be affected by Sections 17-303, 17-607 and 17-804 of the DRULPA).

In addition, each ANDX Series A Preferred Unit issued and outstanding immediately prior to the effective time of the Merger will be converted into the right to receive an MPLX Series B Preferred Unit (the “ANDX Series A Consideration”) and each MPLX Series B Preferred Unit so issued will be validly issued, fully paid and non-assessable (except to the extent such non-assessability may be affected by Sections 17-303, 17-607 and 17-804 of the DRULPA).

Holders of ANDX Common Units will not be entitled to receive any fractional MPLX Common Units in the Merger, and no holders of ANDX Common Units will be entitled to distributions, voting rights or other rights in respect of any fractional MPLX Common Unit. Holders of ANDX Common Units that would otherwise have been entitled to receive a fractional MPLX Common Unit will instead be entitled to receive, in lieu of fractional units, an amount in cash, without interest, rounded to the nearest cent, equal to the product of (A) the fraction of an MPLX Common Unit (after aggregating all the fractional MPLX Common Units held by the holder at the effective time of the Merger and rounded to three decimal places) to which the holder would otherwise be entitled, and (B) an amount equal to the average of the volume weighted average price per unit of the MPLX Common Units on the NYSE (as reported by Bloomberg L.P. or, if not reported therein, in another authoritative source mutually selected by MPLX and ANDX) on each of the ten consecutive trading days ending with the complete trading day immediately prior to the effective time of the Merger.

Each ANDX TexNew Mex Unit issued and outstanding immediately prior to the effective time of the Merger will be converted into a right to receive a validly issued, fully paid and non-assessable (except to the extent such non-assessability may be affected by Sections 17-303, 17-607 and 17-804 of the DRULPA) MPLX TexNew Mex Unit, and all ANDX TexNew Mex Units will be deemed to be cancelled and will cease to exist as of the effective time of the Merger.

The ANDX Special Limited Partner Interest outstanding immediately prior to the effective time of the Merger will be converted into the right to receive the MPLX Special Limited Partner Interest and the ANDX Special Limited Partner Interest will be deemed to be cancelled and will cease to exist as of the effective time of the Merger.

All ANDX Common Units outstanding immediately prior to the effective time of the Merger, including the Public Unitholder Eligible Units and the Affiliated Unitholder Eligible Units, and all ANDX Series A Preferred Units, will cease to be outstanding, will be cancelled and will cease to exist as of the effective time of the Merger. Each certificate formerly representing any of the ANDX Common Units and each book-entry account formerly representing any non-certificated ANDX Common Units will thereafter represent only the right to receive, without interest, the Public Unitholder Merger Consideration or Affiliated Unitholder Merger

 

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Consideration, as applicable, and the right, if any, to receive cash in lieu of fractional units into which ANDX Common Units have been converted, and any distributions payable with respect to the MPLX Common Units issued in the Merger, the record date for which is at or after the effective time of the Merger. Each certificate formerly representing any of the ANDX Series A Preferred Units and each book-entry account formerly representing any non-certificated ANDX Series A Preferred Units will thereafter represent only the right to receive, without interest, the ANDX Series A Consideration and any distributions payable with respect to the MPLX Series B Preferred Units issued in the Merger, the record date for which is at or after the effective time of the Merger.

Each limited liability company interest of Merger Sub issued and outstanding immediately prior to the effective time of the Merger will be converted into ANDX Common Units, which shall constitute in the aggregate 100% of the aggregate partnership interest of all limited partners in the surviving entity in the Merger.

MPLX’s partnership interests issued and outstanding immediately prior to the effective time of the Merger will be unchanged and remain outstanding, and each limited partner and general partner admitted to MPLX immediately prior to the effective time of the Merger shall continue as a limited partner and general partner of MPLX, as applicable.

Treatment of ANDX Phantom Units in the Merger

At the effective time of the Merger, each ANDX Phantom Unit, other than any ANDX Director Phantom Unit, whether vested or unvested, will, automatically and without any action on the part of the holder, cease to represent a phantom unit denominated in ANDX Common Units and will be converted into a phantom unit denominated in MPLX Common Units (the “Converted MPLX Phantom Unit”). The number of MPLX Common Units subject to each Converted MPLX Phantom Unit will be equal to the product (rounded down to the nearest whole number) of (x) the number of ANDX Common Units subject to such ANDX Phantom Unit immediately prior to the effective time of the Merger multiplied by (y) the Public Unitholder Exchange Ratio. Any then-accumulated distribution equivalent amounts payable pursuant to distribution equivalent rights with respect to each ANDX Phantom Unit will carry over and be paid to the holder upon, and subject to, the vesting of the Converted MPLX Phantom Unit that corresponds to the ANDX Phantom Unit to which such distribution equivalent amounts relate.

At the effective time of the Merger, each ANDX Director Phantom Unit will automatically and without any action on the part of the holder, be cancelled and will only entitle the holder of the ANDX Director Phantom Unit to receive (without interest), as soon as reasonably practicable after the effective time of the Merger (but in any event no later than ten business days after the effective time of the Merger), a cash payment equal to (i) the number of ANDX Common Units subject to the ANDX Director Phantom Unit immediately prior to the effective time of the Merger, whether or not vested, multiplied by (ii) the product of (A) the Public Unitholder Exchange Ratio and (B) the average of the volume weighted average price per unit of MPLX Common Units on NYSE (as reported by Bloomberg L.P. or, if not reported therein, in another authoritative source mutually selected by MPLX and ANDX) on each of the ten consecutive trading days ending with the complete trading day immediately prior to the Closing Date; provided, however, that to the extent that the ANDX Director Phantom Unit constitutes nonqualified deferred compensation subject to 409A of the Code, such payment shall be paid in accordance with the applicable award’s terms and at the earliest time permitted under the terms of such award that will not result in the application of a tax penalty under Section 409A of the Code.

Exchange Procedures

At or prior to the effective time of the Merger, MPLX will deposit with an exchange agent selected by MPLX with ANDX’s prior approval (which approval must not be unreasonably conditioned, withheld or delayed) to serve as the exchange agent for the benefit of the holders of the Public Unitholder Eligible Units, Affiliated Unitholder Eligible Units and the Series A preferred Units (a) an aggregate number of MPLX

 

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Common Units and MPLX Series B Preferred Units, as applicable, to be issued in uncertificated form or book-entry form and (b) an aggregate amount of cash comprising approximately the aggregate amount of cash, if any, required to be paid in lieu of any fractional MPLX Common Units pursuant to the Merger Agreement. In addition, MPLX will deposit with the exchange agent, as necessary from time to time after the effective time of the Merger, any distributions, if any, to which the holders of Public Unitholder Eligible Units, Affiliated Unitholder Eligible Units or ANDX Series A Preferred Units, as applicable, may be entitled, as further described in the section entitled “—Distributions on MPLX Common Units and MPLX Series B Preferred Units” beginning on page 84.

Promptly after the effective time of the Merger (and in any event within three business days thereafter), MPLX will cause the exchange agent to mail to each holder of record of Public Unitholder Eligible Units, Affiliated Unitholder Eligible Units or ANDX Series A Preferred Units that are represented by certificates or book-entry units not held through The Depositary Trust Company (“DTC”) a notice advising such holders of the effectiveness of the Merger, including a letter of transmittal and instructions for surrendering the certificates representing such Public Unitholder Eligible Units, Affiliated Unitholder Eligible Units or ANDX Series A Preferred Units (or affidavits of loss in lieu of certificates) or transferring the book-entry units to the exchange agent in exchange for the Public Unitholder Merger Consideration, Affiliated Unitholder Merger Consideration or the ANDX Series A Consideration, cash in lieu of fractional MPLX Common Units and distributions, in each case, to which such holders are entitled pursuant to the terms of the Merger Agreement. With respect to book-entry units held through DTC, MPLX and ANDX will cooperate to establish procedures with the exchange agent and DTC to ensure that the exchange agent will transmit to DTC or its nominees on the Closing Date (or if closing occurs after 11:30 a.m. (New York Time) on the Closing Date, on the first business day after the Closing Date), upon surrender of the Public Unitholder Eligible Units, Affiliated Unitholder Eligible Units or ANDX Series A Preferred Units, as applicable, held of record by DTC or its nominees in accordance with DTC’s customary surrender procedures, Public Unitholder Merger Consideration, the Affiliated Unitholder Merger Consideration, the ANDX Series A Consideration, cash in lieu of fractional MPLX Common Units and distributions, in each case, to which such beneficial owners thereof are entitled pursuant to the terms of the Merger Agreement. Upon surrender to the exchange agent of the Public Unitholder Eligible Units, Affiliated Unitholder Eligible Units or ANDX Series A Preferred Units by physical surrender of the certificates representing Public Unitholder Eligible Units, Affiliated Unitholder Eligible Units or ANDX Series A Preferred Units or sending “an agent’s message” in customary form for book-entry units, the holder of such certificates or book-entry units will be entitled to receive in exchange therefor (i) the number of ANDX Common Units that such holder is entitled to receive, and (ii) cash in the amount (after giving effect to any required tax withholdings as provided in the Merger Agreement) of any cash in lieu of fractional MPLX Common Units plus any unpaid non-stock distributions and any other distributions that such holder has the right to receive pursuant to the Merger Agreement. No interest will be paid or accrued on any amount payable upon due surrender of the Public Unitholder Eligible Units, the Affiliated Unitholder Eligible Units or the ANDX Series A Preferred Units.

Termination of the Exchange Fund

Any portion of the exchange fund that remains unclaimed for twelve months after the effective time of the Merger will be delivered to MPLX. Thereafter, any holder of Public Unitholder Eligible Units, Affiliated Unitholder Eligible Units or ANDX Series A Preferred Units will be entitled to look only to MPLX for delivery of the Public Unitholder Merger Consideration, Affiliated Unitholder Merger Consideration or ANDX Series A Consideration, as applicable, and payment of any cash, distributions payable and/or issuable, as contemplated by the Merger Agreement, without any interest thereon. None of the surviving entity in the Merger, MPLX, the exchange agent or any other person will be liable to any former holder of ANDX Common Units or ANDX Series A Preferred Units for any amount properly delivered to a public official pursuant to applicable abandoned property, escheat or similar laws. Immediately before any portion of the exchange fund would otherwise escheat to or become the property of any governmental entity, such amount will, to the extent permitted by applicable law, become the property of MPLX free and clear of all claims or interest of any person previously entitled thereto.

 

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Lost, Stolen or Destroyed Unit Certificates

If a certificate for Public Unitholder Eligible Units, Affiliated Unitholder Eligible Units or ANDX Series A Preferred Units has been lost, stolen or destroyed, then before the person holding the certificate is entitled to receive the applicable merger consideration (and/or cash in lieu of fractional units and/or unpaid distributions with respect to such Public Unitholder Merger Consideration or Affiliated Unitholder Merger Consideration, as contemplated by the Merger Agreement), such person will need to make an affidavit of that fact and if required by MPLX or MPLX GP, post a bond (in a customary amount and upon such terms as may be required by MPLX or MPLX GP) as indemnity against any claim that may be made against MPLX or the exchange agent with respect to such certificate.

Adjustments to Prevent Dilution

In the event that, prior to the effective time of the Merger, either ANDX or MPLX changes the number of ANDX Common Units (or securities convertible or exchangeable into or exercisable for ANDX Common Units) or the number of MPLX Common Units (or securities convertible or exchangeable into or exercisable for MPLX Common Units), as the case may be, issued and outstanding, by reason of any reclassification, unit split (including a reverse unit split), unit distribution, recapitalization, merger, issuer tender or exchange offer, or other similar transaction, or a distribution paid in units with a record date within such period is declared, then the Public Unitholder Merger Consideration and Affiliated Unitholder Merger Consideration will be equitably adjusted to provide the holders of ANDX Common Units and MPLX with the same economic effect as contemplated by the Merger Agreement prior to such event.

Organizational Documents

At the effective time of the Merger, the certificate of limited partnership of ANDX as in effect immediately prior to the effective time of the Merger will be amended to reflect the admission of New ANDX GP as the general partner of the surviving entity in the Merger, and the partnership agreement of the surviving entity in the Merger will remain in effect without modification until thereafter changed or amended as provided therein or by applicable law. Pursuant to the partnership agreement of the surviving entity in the Merger, New ANDX GP (as defined in the Merger Agreement) will be the sole general partner of ANDX, with a non-economic general partner interest in ANDX, and MPLX will be admitted as the sole limited partner of ANDX. ANDX will continue after the effective time of the Merger without dissolution.

Distributions on MPLX Common Units and MPLX Series B Preferred Units

All MPLX Common Units and MPLX Series B Preferred Units to be issued pursuant to the Merger shall be deemed issued and outstanding as of the effective time of the Merger and whenever a distribution is declared by MPLX in respect of the MPLX Common Units or MPLX Series B Preferred Units, the record date for which is at or after the effective time of the Merger, that declaration shall include distributions in respect of all units issuable pursuant to the Merger Agreement. No distributions in respect of the MPLX Common Units or MPLX Series B Preferred Units will be paid to any holder of any unsurrendered Public Unitholder Eligible Units, Affiliated Unitholder Eligible Units or ANDX Series A Preferred Unit, as applicable, until the certificate (or affidavit of loss in lieu of the certificate as provided in the Merger Agreement) or book-entry unit is surrendered for exchange in accordance with the Merger Agreement. Following such surrender, there shall be issued and/or paid to the holder of record of the whole MPLX Common Units issued in exchange for Public Unitholder Eligible Units or Affiliated Unitholder Eligible Units, or MPLX Series B Preferred Units issued in exchange for ANDX Series A Preferred Units, without interest, (i) at the time of such surrender, the distributions with a record date at or after the effective time of the Merger and payment date prior to or on the date of surrender and (ii) at the appropriate payment date, the distributions payable with respect to such whole MPLX Common Units or MPLX Series B Preferred Units, as applicable, with a record date after the effective time of the Merger but with a payment date subsequent to surrender.

 

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Representations and Warranties

The Merger Agreement contains customary representations and warranties by ANDX that are subject, in some cases, to specified expectations and qualifications contained in the Merger Agreement, in forms, statements, reports or other documents filed or furnished, as applicable, by ANDX to the SEC (including the exhibits and schedules thereto) on or after December 31, 2017 and prior to the date of the Merger Agreement or in the disclosure letters delivered by ANDX to MPLX in connection with the Merger Agreement. These representations and warranties relate to, among other things:

 

   

the organization, good standing and qualification to do business;

 

   

the capitalization of ANDX, including:

 

   

the issued and outstanding number of ANDX Common Units, ANDX TexNew Mex Units, ANDX Phantom Units, ANDX Director Phantom Units, ANDX Special Limited Partner Interest, ANDX Series A Preferred Units and non-economic ANDX GP Interest;

 

   

the due authorization and validity of all securities and limited partner interests in accordance with the ANDX Partnership Agreement;

 

   

the absence of preemptive, purchase, call, first refusal, subscription or similar rights;

 

   

the ownership of subsidiaries;

 

   

the ownership, due authorization and validity of the non-economic ANDX general partnership interest; and

 

   

the ownership, due authorization and validity of the ANDX Special Limited Partner Interest;

 

   

the corporate authority and approval relating to the execution, delivery and performance of ANDX’s and ANDX GP’s obligations under the Merger Agreement, subject to the approval by a majority of the outstanding ANDX Common Units and the Affiliated Unitholder Eligible Units of the Merger Agreement;

 

   

the ANDX Conflicts Committee’s unanimous determination that the Merger Agreement and the transactions contemplated thereby, including the Merger, are in, or not opposed to, the best interest of ANDX and its subsidiaries treated as a consolidated entity and the holders of Public Unitholder Eligible Units, approval of the Merger Agreement, the Merger and the consummation of the transactions contemplated thereby, and its recommendation that the ANDX Board approve the Merger, the Transaction Documents and the consummation of the transactions contemplated thereby;

 

   

the ANDX Board’s unanimous determination that the Merger Agreement, the other Transaction Documents and the transactions contemplated thereby, including the Merger are in, or not opposed to, the best interests of ANDX and its Subsidiaries treated as a consolidated entity, approval and declaration that the Merger Agreement, the other Transaction Documents to which ANDX and ANDX GP are a party and the transactions contemplated thereby, including the Merger, are advisable, and its recommendation that the holders of ANDX Common Units approve the Merger and adopt the Merger Agreement;

 

   

government notices, reports, filings, consents, registrations, approvals, permits and authorizations required in connection with the execution, delivery and performance of the Merger Agreement and the completion of the Merger;

 

   

filings with the SEC since December 31, 2017 and the financial statements included therein;

 

   

compliance with NYSE rules and regulations;

 

   

compliance with disclosure controls and procedures required under the Exchange Act and the Sarbanes-Oxley Act of 2002;

 

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except in connection with the execution and delivery of the Merger Agreement, the Merger, or any of the other transactions contemplated by the Merger Agreement, the operation of the business consistent in all material respects with past practices since December 31, 2018 through the date of the Merger Agreement by ANDX and ANDX GP and their subsidiaries;

 

   

the absence of a material adverse effect since December 31, 2018 through the date of the Merger Agreement with respect to ANDX and its subsidiaries;

 

   

the absence of certain legal proceedings, investigations and government orders against ANDX or ANDX GP and their subsidiaries;

 

   

employee benefits and labor matters;

 

   

compliance with applicable laws, the absence of governmental investigations, the possession of and compliance with licenses and permits necessary for the conduct of business and the absence of violations of the U.S. Foreign Corrupt Practices Act and any other U.S. and foreign anti-corruption laws;

 

   

the inapplicability of anti-takeover laws;

 

   

environmental matters;

 

   

tax matters;

 

   

intellectual property rights;

 

   

certain material contracts;

 

   

real property and rights-of-way;

 

   

opinion of financial advisor;

 

   

insurance;

 

   

the absence of undisclosed investment banker, broker or finders fees; and

 

   

the absence of any untrue statement of a material fact or omission to state a material fact in the information supplied by ANDX, ANDX GP and their subsidiaries for inclusion in this registration statement.

The Merger Agreement also contains customary representation and warranties by MPLX, MPLX GP and Merger Sub that are subject, in some cases, to specified expectations and qualifications contained in the Merger Agreement, in forms, statements, reports or other documents filed or furnished, as applicable, by MPLX to the SEC (including the exhibits and schedules thereto) on or after December 31, 2017 and prior to the date of the Merger Agreement or in the disclosure letter delivered to ANDX and ANDX GP relating to the following:

 

   

the organization, good standing and qualification to do business;

 

   

the capitalization of MPLX and Merger Sub, including:

 

   

the issued and outstanding MPLX Common Units, MPLX Series A Preferred Units, MPLX Performance Units, MPLX Phantom Units and non-economic MPLX GP Interest;

 

   

the due authorization and validity of all securities and limited partner interests in accordance with the MPLX Partnership Agreement;

 

   

the absence of preemptive rights, purchase, call, first refusal subscription or similar rights;

 

   

the ownership of significant subsidiaries of MPLX;

 

   

the ownership of the non-economic MPLX GP interest; and

 

   

the ownership of issued and outstanding limited liability company interests in Merger Sub;

 

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the corporate authority relating to the execution, delivery and performance of MPLX’s and Merger Sub’s respective obligations under the Merger Agreement;

 

   

the unanimous determination by the MPLX Conflicts Committee that the Merger Agreement and the transactions contemplated thereby, including the Merger, are not adverse to the best interest of MPLX and its subsidiaries treated as a consolidated entity and the holders of MPLX Common Units (other than MPLX GP and its Affiliates, including MPC), approval of the Merger Agreement and the transactions contemplated thereby, including the Merger, and its recommendation that the MPLX Board approve the Merger Agreement and the consummation of the transactions contemplated thereby, including the Merger;

 

   

the MPLX Board’s unanimous determination that the Merger Agreement, the other Transaction Documents and the transactions contemplated thereby, including the Merger are not adverse to the best interests of MPLX and its subsidiaries treated as a consolidated entity, approval and declaration that the Merger Agreement, the other Transaction Documents to which MPLX and MPLX GP are a party and the transactions contemplated thereby, including the Merger, are advisable;

 

   

government notices, reports, filings, consents, registrations, approvals, permits and authorizations required in connection with the execution, delivery and performance of the Merger Agreement and the completion of the Merger;

 

   

filings with the SEC since December 31, 2017 and the financial statements included therein;

 

   

compliance with NYSE rules and regulations;

 

   

compliance with disclosure controls and procedures required under the Exchange Act and the Sarbanes-Oxley Act of 2002;

 

   

except in connection with the execution and delivery of the Merger Agreement, the Merger, or any of the transactions contemplated by the Merger Agreement, the operation of the business consistent in all material respects with past practices since December 31, 2018, by MPLX and MPLX GP and their subsidiaries;

 

   

the absence of a material adverse effect since December 31, 2018 through the date of the Merger Agreement with respect to MPLX and its subsidiaries;

 

   

the absence of certain legal proceedings, investigations and government orders against MPLX or MPLX GP and their subsidiaries;

 

   

employee benefits and labor matters;

 

   

compliance with applicable laws, the absence of governmental investigations and the possession of and compliance with licenses and permits necessary for the conduct of business and the absence of violations of the U.S. Foreign Corrupt Practices Act and any other U.S. and foreign anti-corruption laws;

 

   

the inapplicability of anti-takeover laws;

 

   

environmental matters;

 

   

tax matters;

 

   

intellectual property rights;

 

   

certain material contracts;

 

   

real property and rights-of-way;

 

   

insurance;

 

   

the absence of undisclosed investment banker, broker or finders fees; and

 

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the absence of any untrue statement of a material fact or omission to state a material fact in the information supplied by MPLX, MPLX GP and their subsidiaries for inclusion in this registration statement.

Many of the representations and warranties contained in the Merger Agreement are qualified by an “ANDX material adverse effect” or an “MPLX material adverse effect” standard (that is, they would not be deemed untrue or incorrect unless their failure to be true and correct individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on ANDX or its subsidiaries or MPLX or its subsidiaries and/or by a general materiality standard or by a knowledge standard). Some of the representations and warranties contained in the Merger Agreement are also qualified by their effect on the consummation of the transactions contemplated by the Merger Agreement (that is, they would not be deemed untrue or incorrect unless their failure to be true and correct (assuming there was no MPLX/ANDX (as applicable) material adverse effect, where such standard was also applicable) would reasonably be expected to prevent, materially delay or materially impair the consummation of the transactions contemplated by the Merger Agreement).

An “ANDX material adverse effect” means any change, event, occurrence or effect that, individually or taken together with any other changes, events, occurrences or effects is, or would reasonably be expected to be, materially adverse to the financial condition, properties, business or results of operations of ANDX and its subsidiaries taken as a whole, excluding any effects to the extent resulting from any of the following:

 

   

the announcement or consummation of the transactions contemplated by the Merger Agreement; provided that the exception related to the consummation of the transaction does not apply to any representation or warranty if the primary purpose from the face of such representation or warranty is to address the consequences resulting from the consummation of the Merger; and

 

   

any litigation brought by or on behalf of any current or former holder of ANDX Common Units, in its capacity as such, arising from allegations of any breach of duty or violation of law, or the ANDX Partnership Agreement relating to the Merger Agreement or the Merger;

The definition of “ANDX material adverse effect” also excludes any effect to the extent resulting from any of the following, provided that such exclusions will not prevent or otherwise affect a determination that any change, effect or development underlying such matter has resulted in or contributed to, a “ANDX material adverse effect”:

 

   

any failure to meet any internal or publicly available projections, forecasts, estimates or predictions; and

 

   

any decline in the market price, trading volume or credit rating of any of ANDX’s securities.

Except to the extent that they disproportionately adversely affect ANDX and its subsidiaries compared to other companies of similar size operating in the petrochemical refining and pipeline industries, the following are also excluded from the definition of “ANDX material adverse effect”:

 

   

changes in applicable law or in GAAP after the date of the Merger Agreement;

 

   

changes in the economy or financial markets generally in the U.S. or any other country, or changes that are the result of acts of war, sabotage or terrorism or natural disasters;

 

   

changes that are the result of factors generally affecting the petrochemical refining or pipeline industries; and

 

   

changes in the prices of natural gas, crude oil, refined petroleum products, other hydrocarbon products or natural gas liquids or products produced from hydrocarbon products, natural gas liquids or crack spreads.

An “MPLX material adverse effect” means any change, event, occurrence or effect that, individually or taken together with any other changes, events, occurrences or effects is, or would reasonably be expected to be,

 

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materially adverse to the financial condition, properties, business or results of operations of MPLX and its subsidiaries taken as a whole, excluding any effects to the extent resulting from any of the following:

 

   

the announcement or consummation of the transactions contemplated by the Merger Agreement; provided that the exception related to the consummation of the transaction does not apply to any representation or warranty if the primary purpose from the face of such representation or warranty is to address the consequences resulting from the consummation of the Merger; and

 

   

any litigation brought by or on behalf of any current or former holder of MPLX Common Units, in its capacity as such, arising from allegations of any breach of duty or violation of Law or breach relating to the Merger Agreement, the MPLX Partnership Agreement or the Merger.

The definition of “MPLX material adverse effect” also excludes any effect to the extent resulting from any of the following, provided that such exclusions will not prevent or otherwise affect a determination that any change, effect or development underlying such matter has resulted in or contributed to, an “MPLX material adverse effect”:

 

   

any failure to meet any internal or publicly available projections, forecasts, estimates or predictions; and

 

   

any decline in the market price, trading volume or credit rating of any of MPLX’s securities.

Except to the extent that they disproportionately adversely affect MPLX and its subsidiaries compared to other companies of similar size operating in the petrochemical refining and pipeline industries, the following are also excluded from the definition of “MPLX material adverse effect”:

 

   

changes in applicable law or in GAAP after the date of the Merger Agreement;

 

   

changes in the economy or financial markets generally in the U.S. or any other country, or changes that are the result of acts of war, sabotage or terrorism or natural disasters;

 

   

changes that are the result of factors generally affecting the petrochemical refining or pipeline industries; and

 

   

changes in the prices of natural gas, crude oil, refined petroleum products, other hydrocarbon products or natural gas liquids or products produced from hydrocarbon products, natural gas liquids or crack spreads.

Interim Operations of MPLX and ANDX Pending the Merger

Under the terms of the Merger Agreement, each of ANDX and ANDX GP will, and will cause its subsidiaries to, after the date of the Merger Agreement and prior to the effective time of the Merger except as required by applicable law or otherwise as expressly contemplated by the Merger Agreement, (i) conduct its business in the ordinary course of business consistent with past practice, (ii) use commercially reasonable efforts to maintain and preserve intact its business organizations and the goodwill of those having business relationships with it and retain the services of its present officers and key employees, (iii) use commercially reasonable efforts to comply in all material respects with applicable laws and material contracts, and (iv) use commercially reasonable efforts to keep in full force and effect all material insurance policies maintained by or on behalf of ANDX, ANDX GP and their subsidiaries, other than changes to such policies made in the ordinary course of business.

In addition, ANDX and ANDX GP have agreed that, after the date of the Merger Agreement and prior to the effective date of the Merger, unless MPLX gives its approval in writing (such approval not to be unreasonably withheld, delayed or conditioned), and except as otherwise expressly contemplated by the Merger Agreement, as

 

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required by applicable law or as subject to certain other exceptions set forth in the Merger Agreement, ANDX will not and will not permit its subsidiaries to do the following, among other things:

 

   

adopt or propose any change to its governing documents or the governing documents of its subsidiaries as in effect on the date of the Merger Agreement, other than in immaterial respects in relation to any of their subsidiaries;

 

   

issue, sell, pledge, dispose of, grant, transfer, encumber or authorize the issuance, sale, pledge, disposition, grant, transfer, lease, license, guarantee or encumbrance of, any equity securities of ANDX or any its subsidiaries, or securities convertible or exchangeable into or exercisable for any units of such capital stock, or any options, warrants or other rights of any kind to acquire any equity securities or such convertible or exchangeable securities or interests;

 

   

declare, set aside or pay any distributions in respect of its equity securities or rights or split, combine or reclassify any of its equity securities or rights, subject to certain exceptions, including distributions to the holders of limited partnership units announced prior to the date of the Merger Agreement or consistent with past practice;

 

   

settle, propose to settle or compromise any action before a governmental entity if such settlement, proposed settlement or compromise (i) with respect to the payment of monetary damages, involves the payment of monetary damages that exceed $5,000,000 in the aggregate (together with all other settlements or compromises after the date of the Merger Agreement), (ii) imposes any material equitable or non-monetary relief, penalty or restriction on ANDX, ANDX GP or their subsidiaries (or, after the effective time of the Merger, MPLX or MPLX GP or any of their subsidiaries), or (iii) that would reasonably be expected to affect the rights or defenses available to ANDX or ANDX GP or any of their subsidiaries in certain related or similar claims;

 

   

recommend, propose, announce, adopt or vote to adopt a plan of complete or partial dissolution or liquidation that would (i) prevent or materially impede or delay the ability of the parties to satisfy any of the conditions to, or the consummation of, the transactions set forth in the Merger Agreement, or (ii) adversely affect in a material way the rights of holders of the securities of any party to the Merger Agreement;

 

   

transfer, sell, lease, license, mortgage, pledge, surrender, encumber, divest, cancel, abandon or allow to lapse or expire or otherwise dispose of any of ANDX’s or ANDX GP’s material assets, product lines or businesses or those of any of their subsidiaries, including any equity interests of any of their subsidiaries, subject to certain exceptions, including (i) in connection with goods or services provided in the ordinary course of business and sales of obsolete assets, or (ii) for sales, leases, licenses or other dispositions of assets that are contemplated in any budget that has received the requisite approvals from the governing bodies of ANDX or any of its subsidiaries, are in the ordinary course of business or with a fair market value not in excess of $10,000,000 in the aggregate;

 

   

except for the incurrence of indebtedness for borrowed money pursuant to any revolving line of credit of ANDX or any of its subsidiaries, (i) incur, assume or guarantee any indebtedness for borrowed money, (ii) issue, assume or guarantee any debt securities, (iii) grant any option, warrant or right to purchase any debt securities, or (iv) issue any securities convertible into or exchangeable for any debt securities of others;

 

   

amend, modify or terminate, or waive any material right under, any ANDX Material Contract (as defined in the Merger Agreement) with MPC or any of its Affiliates (other than ANDX or any of its subsidiaries);

 

   

enter into any contract with MPC or any of its Affiliates (other than ANDX or any of its subsidiaries) that would be a “material contract” pursuant to Item 601(b)(10) of Regulation S-K under the Securities Act;

 

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make any change to its accounting policies or procedures, except as required by changes after the date of the Merger Agreement in accordance with GAAP;

 

   

change its fiscal or taxable year or method of accounting for tax purposes, make, change or revoke any material tax election, settle or compromise any material liability for taxes, file any material amended tax return, enter into an arrangement with any governmental entity with respect to taxes, surrender any right to claim a refund for taxes, consent to an extension of the statute of limitations applicable to any tax claim or assessment, or take any action that would reasonably be expected to cause ANDX or any of its subsidiaries to be treated, for U.S. federal income tax purposes, as a corporation;

 

   

except as required pursuant to the terms of any employee benefit plan or adopted pursuant to the Merger Agreement or as otherwise required by applicable law, (i) establish, adopt, materially amend or terminate any employee benefit plan, (ii) grant any new awards, or amend or modify the terms of any outstanding awards, under any employee benefit plan, (iii) take any action to accelerate the vesting or payment, or fund or in any other way secure the payment, of compensation or benefits under any employee benefit plan, (iv) hire any employee, other than any employee with an aggregate annual salary of less than $250,000, or (v) terminate the employment of any executive officer other than for cause; or

 

   

agree, authorize or commit to do any of the foregoing.

Each of MPLX and MPLX GP will and will cause its subsidiaries to, after the date of the Merger Agreement and prior to the effective time of the Merger, except as required by applicable laws or as otherwise expressly contemplated by the Merger Agreement, (i) conduct its business in the ordinary course of business consistent with past practice, (ii) use commercially reasonable efforts to maintain and preserve intact its business organization and the goodwill of those having business relationships with it and retain the services of its present officers and key employees, (iii) use commercially reasonable efforts to comply in all material respects with applicable laws and material contracts, and (iv) use commercially reasonable efforts to keep in force all material insurance policies maintained by or on behalf of MPLX, MPLX GP and their subsidiaries, other than changes to such policies made in the ordinary course of business.

In addition, MPLX and MPLX GP have agreed that, after the date of the Merger Agreement and prior to the effective date of the Merger, except as required by applicable laws or as otherwise expressly contemplated by the Merger Agreement, (i) each of the MPLX and MPLX GP will, and agrees that it will cause its subsidiaries to, conduct its business in the ordinary course of business consistent with past practice, and (ii) each of MPLX and MPLX GP will not and will not permit its subsidiaries to do the following, among other things, unless ANDX and ANDX GP gives their approval in writing (such approval not to be unreasonably withheld, delayed or conditioned):

 

   

adopt or propose any change to its governing documents or the governing documents of its subsidiaries as in effect on the date of the Merger Agreement, other than in immaterial respects in relation to any of their subsidiaries;

 

   

make any change to its accounting policies or procedures, except as required by changes after the date of the Merger Agreement in accordance with GAAP; or

 

   

change its fiscal or taxable year or method of accounting for tax purposes, make, change or revoke any material tax election, settle or compromise any material liability for taxes, file any material amended tax return, enter into an arrangement with any governmental entity with respect to taxes, surrender any right to claim a refund for taxes, consent to an extension of the statute of limitations applicable to any tax claim or assessment, or take any action that would reasonably be expected to cause MPLX or any of its subsidiaries to be treated, for U.S. federal income tax purposes, as a corporation.

 

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Reasonable Best Efforts; Regulatory Filings and Other Actions

Reasonable Best Efforts

ANDX, ANDX GP, MPLX and MPLX GP have agreed to cooperate with each other and use (and cause their respective subsidiaries to use) their respective reasonable best efforts to take all actions reasonably necessary, proper or advisable on their respective parts under the Merger Agreement and applicable laws to complete and make effective the Merger and the other transactions contemplated by the Merger Agreement as soon as practicable, including preparing and filing as promptly as practicable all documentation to effect all necessary notices, reports and other filings and to obtain as promptly as practicable all consents, registrations, approvals, permits and authorizations necessary or advisable to be obtained from any third party and/or any governmental entity in order to complete the Merger or any of the other transactions contemplated by the Merger Agreement.

Filings; Information Sharing

ANDX, ANDX GP, MPLX and MPLX GP have agreed to cooperate in the preparation of the Registration Statement of which this consent statement/prospectus forms a part and use their reasonable best efforts to have the registration statement declared effective under the Securities Act as promptly as reasonably practicable after such filing, to maintain such effectiveness for as long as necessary to consummate the Merger and the other transactions contemplated by the Merger Agreement, and promptly thereafter mail this consent statement/prospectus, which will include a form of consent that may be executed by holders of the ANDX Common Units in connection with their written consent, to the holders of ANDX Common Units. The parties will use their reasonable best efforts to satisfy prior to the effective date of the registration statement all necessary state securities laws or “blue sky” notice requirements in connection with the Merger and other transactions contemplated by the Merger Agreement.

Subject to certain exceptions specified in the Merger Agreement, ANDX and MPLX have agreed to keep each other apprised of the status of matters relating to the completion of the transactions contemplated by the Merger Agreement and to furnish to each other, upon request, with all information concerning itself, its subsidiaries, directors, officers and unitholders and such other matters as may be reasonably necessary or advisable in connection with any statement, filings, notice or application made by or on behalf of MPLX, MPLX GP, ANDX, ANDX GP or any of their respective subsidiaries to any third party and/or any governmental entity in connection with the Merger and other transactions contemplated by the Merger Agreement.

Transaction Litigation

Under the terms of the Merger Agreement, other than any proceeding where MPLX or MPLX GP are adverse to ANDX or ANDX GP, ANDX and ANDX GP will give MPLX and MPLX GP the opportunity to participate in the defense or settlement of any unitholder litigation against ANDX or ANDX GP and/or the members of the ANDX Board relating to the Merger, the Merger Agreement or any of the transactions contemplated by the Merger Agreement; however, ANDX and ANDX GP will control the defense and/or settlement of any such litigation and the related disclosure of information must be made after consultation with the other parties. ANDX and ANDX GP have agreed not to settle any litigation without the consent of MPLX and MPLX GP, which consent will not be unreasonably withheld, conditioned or delayed.

Access and Reports

Until the earlier of termination of the Merger Agreement or the effective time of the Merger and upon reasonable prior notice, ANDX and ANDX GP will give MPLX and MPLX GP and MPLX and MPLX GP will give ANDX and ANDX GP reasonable access during normal business hours to the offices, properties, employees, books and records of such party and their subsidiaries and furnish to such other parties and their authorized representatives financial and operating data and other information as may reasonably be requested.

 

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The parties will not be required to permit any inspection or disclose any document or information that would, in the reasonable judgment of ANDX, ANDX GP, MPLX or MPLX GP, (i) result in the disclosure of any trade secrets of any third parties or violate the terms of any confidentiality provisions in any agreement with a third party entered into prior to the date of the Merger Agreement, (ii) result in a violation of applicable law, including any fiduciary duty, (iii) waive the protection of any attorney-client privilege, or (iv) result in the disclosure of any sensitive or personal information that would expose ANDX, ANDX GP, MPLX or MPLX GP to the risk of liability.

Stock Exchange Listing and Delisting

MPLX and MPLX GP have agreed to use their reasonable best efforts to take, or cause to be taken, and do or cause to be done all things reasonably necessary, proper or advisable on their part to cause the MPLX Common Units to be issued in the Merger to be approved for listing on the NYSE subject to official notice of issuance, prior to the Closing Date. Prior to the Closing Date, ANDX and ANDX GP will cooperate with MPLX and MPLX GP and use reasonable best efforts to take, or cause to be taken, all actions, and do or cause to be done all things, reasonably necessary, proper or advisable on their part to enable the delisting by MPLX and MPLX GP and the surviving entity in the Merger of the ANDX Common Units from the NYSE and the deregistration of the ANDX Common Units under the Exchange Act as promptly as practicable after the effective time of the Merger.

Distribution Cooperation

ANDX GP will determine, declare and cause ANDX to pay regular quarterly cash distributions on the ANDX Common Units for each quarter in accordance with the ANDX Partnership Agreement in the ordinary course and consistent with past practice, including with respect to amount and timing of record dates and payment dates; provided, however that, subject to applicable law, the Merger Agreement and the ANDX Partnership Agreement, any such regular quarterly distribution will not be less than $1.03 per ANDX Common Unit without separate determination and approval of the ANDX Conflicts Committee.

ANDX, ANDX GP, MPLX and MPLX GP have agreed to coordinate with each other regarding the declaration and payment of distributions in respect of any ANDX Common Units and MPLX Common Units, so that no holder of ANDX Common Units receives two distributions or fails to receive one distribution, for any calendar quarter, with respect to its applicable ANDX Common Units or MPLX Common Units received pursuant to the Merger in exchange for the ANDX Common Units.

Tax Treatment

ANDX, ANDX GP, MPLX and MPLX GP have agreed that, for U.S. federal income and applicable state and local tax purposes, the Merger is intended to be treated as an “assets-over” partnership merger transaction with MPLX treated as the resulting partnership. As a result, the Merger is intended to be treated for U.S. federal income and applicable state and local tax purposes as (i) a contribution of all of the assets and liabilities of ANDX to MPLX in exchange for partnership interests in MPLX, and the cash received in lieu of fractional units pursuant to the Merger Agreement (which to the greatest extent possible is intended to be treated as reimbursement of capital expenditures pursuant to Treasury Regulations Section 1.707-4(d)), immediately followed by (ii) a liquidating distribution by ANDX of such partnership interests in MPLX and cash received in lieu of fractional units pursuant to the Merger Agreement to the partners of ANDX, taking into account the non-pro rata sharing of the applicable merger consideration (which non-pro rata sharing is, to the greatest extent possible, intended to be treated as a nontaxable sharing of any unrealized gain or unrealized loss within ANDX). None of MPLX, ANDX nor any partner of MPLX or ANDX is intended to recognize taxable gain (other than any gain resulting from (A) any decrease in partnership liabilities pursuant to Section 752 of the Code, (B) a disguised sale attributable to contributions of cash or other property to ANDX after the date of the Merger Agreement and prior to the Merger, or (C) if required by applicable law and the ultimate circumstances, (I) the receipt of any non-pro rata merger consideration or (II) the receipt of cash in lieu of fractional units pursuant to

 

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the Merger Agreement). Unless required to do so as a result of a “determination” as defined for U.S. federal income tax purposes, ANDX, ANDX GP, MPLX and MPLX GP agree not to make any tax filings or otherwise take any position inconsistent with this intended tax treatment and to cooperate with the other parties to make any filings, statements or reports required to effect, disclose or report this intended tax treatment.

Conflicts Committees

Prior to the earlier of the effective time of the Merger and the termination of the Merger Agreement, none of ANDX, ANDX GP, MPLX, MPLX GP or any of their subsidiaries will eliminate the ANDX Conflicts Committee or the MPLX Conflicts Committee, or revoke or diminish the authority of the ANDX Conflicts Committee or the MPLX Conflicts Committee, or remove or cause the removal (without cause) of any director of the ANDX Board or MPLX Board that is a member of the ANDX Conflicts Committee or the MPLX Conflicts Committee either as a member of such board or such committee, without the affirmative vote of the MPLX Board or ANDX Board, as applicable, including the affirmative vote of a majority of members of the applicable conflicts committee.

New MPLX Interests

Prior to the closing, MPC and MPLX shall take all actions that are necessary and appropriate to amend and restate the MPLX Partnership Agreement to allow for the creation and issuance of the MPLX Series B Preferred Units, the MPLX Special Limited Partner Interest and the MPLX TexNew Mex Units pursuant to the Merger Agreement.

Conditions to the Completion of the Merger

Under the Merger Agreement, the respective obligations of MPLX, MPLX GP, ANDX, ANDX GP and Merger Sub to complete the Merger are subject to the satisfaction or waiver at or prior to the closing of the following conditions:

 

   

Effectiveness of the Registration Statement. The registration statement of which this consent statement/prospectus forms a part must have become effective under the Securities Act and must not be the subject of any stop order issued by the SEC or any pending proceedings initiated by the SEC seeking such a stop order.

 

   

Written Consent. The written consent of holders of a majority of the outstanding ANDX Common Units approving the Merger Agreement and the transactions contemplated thereby must have been obtained in accordance with applicable law and filed with the minutes of proceedings of ANDX, and such written consent must not have been amended, modified, withdrawn, terminated or revoked.

 

   

No Orders. There must not have been enacted, issued, promulgated, enforced or entered by any court or other governmental entity of competent jurisdiction any permanent, preliminary or temporary injunction or other order, decree, decision, determination or judgment that would delay, restrain, prevent, enjoin or otherwise prohibit consummation of the transactions contemplated by the Merger Agreement.

 

   

NYSE Listing. The MPLX Common Units issuable to the holders of ANDX Common Units pursuant to the Merger Agreement must have been authorized for listing on the NYSE upon official notice of issuance.

 

   

Tax Opinions. MPLX and ANDX must have received tax opinions from their respective legal counsel relating to the classification of their gross income as “qualifying income” within the meaning of Section 7704(d) of the Code.

 

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Under the Merger Agreement, the obligations of MPLX, MPLX GP and Merger Sub to complete the Merger are subject to the satisfaction or waiver of the following additional conditions:

 

   

certain representations and warranties of ANDX and ANDX GP regarding aspects of ANDX’s capitalization must be true and correct as of the date of the Merger Agreement and as of the Closing Date as though made on and as of such date and time (except to the extent that any such representation and warranty expressly speaks as of another date, in which case such representation and warranty will only be required to be so true and correct as of such other date), except for such inaccuracies as would not be material in amount or effect;

 

   

the representations and warranties of ANDX and ANDX GP regarding the absence of any ANDX material adverse effect since December 31, 2018 must be true and correct as of the date of the Merger Agreement;

 

   

certain representations and warranties of ANDX and ANDX GP regarding organization and good standing, corporate authority, approval and fairness, and takeover statutes must be true and correct, without regard to materiality, material adverse effect or similar qualifiers, in all material respects as of the date of the Merger Agreement and as of the closing as though made on and as of such date and time (except to the extent that any such representation and warranty expressly speaks as of another date, in which case such representation and warranty will only be required to be true and correct as of such other date);

 

   

the other representations and warranties of ANDX and ANDX GP must be true and correct, without regard to materiality, material adverse effect or similar qualifiers, as of the date of the Merger Agreement and as of the closing as though made on and as of such date and time (except to the extent that any such representation and warranty expressly speaks as of another date, in which case such representation and warranty will only be required to be so true and correct as of such other date), other than for such failures to be so true and correct that, individually or in the aggregate, have not had and would not reasonably be expected to have a material adverse effect;

 

   

ANDX and ANDX GP must have performed in all material respects all of their obligations under the Merger Agreement required to be performed at or prior to the date of the closing;

 

   

there must not have occurred any ANDX material adverse effect since the date of the Merger Agreement;

 

   

MPLX, MPLX GP and Merger Sub must have received a certificate signed by an executive officer of ANDX to the effect that the foregoing closing conditions have been satisfied; and

 

   

MPLX must have received an opinion from Jones Day related to certain tax matters as outlined in the Merger Agreement.

Under the Merger Agreement, the obligation of ANDX and ANDX GP to complete the Merger is subject to the satisfaction or waiver of the following additional conditions:

 

   

certain representations and warranties of MPLX and MPLX GP regarding aspects of their capitalization and the capitalization of Merger Sub must be true and correct as of the date of the Merger Agreement and as of the date of the closing as though made on and as of such date and time (except to the extent that any such representation and warranty expressly speaks as of another date, in which case such representation and warranty will only be required to be so true and correct as of such other date), except for such inaccuracies as would not be material in amount or effect;

 

   

the representations and warranties of MPLX and MPLX GP regarding the absence of any MPLX material adverse effect since December 31, 2018 must be true and correct as of the date of the Merger Agreement;

 

   

certain representations and warranties of MPLX and MPLX GP regarding due organization and good standing, corporate authority and takeover statutes must be true and correct, without regard to

 

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materiality, material adverse effect or similar qualifiers, in all material respects as of the date of the Merger Agreement and as of the closing as though made on and as of such date and time (except to the extent that any such representation and warranty expressly speaks as of another date, in which case such representation and warranty will only be required to be so true and correct as of such other date);

 

   

the other representations and warranties of MPLX and MPLX GP must be true and correct, without regard to materiality, material adverse effect or similar qualifiers, as of the date of the Merger Agreement and as of the date of the closing as though made on and as of such date and time (except to the extent that any such representation and warranty expressly speaks as of another date, in which case such representation and warranty will only be required to be so true and correct as of such other date), other than for such failures to be so true and correct that, individually or in the aggregate, have not had and would not reasonably be expected to have an MPLX material adverse effect;

 

   

MPLX, MPLX GP and Merger Sub must have performed in all material respects all of their obligations under the Merger Agreement required to be performed at or prior to the closing;

 

   

there must not have occurred any MPLX material adverse effect since the date of the Merger Agreement;

 

   

ANDX and ANDX GP must have received a certificate signed by an executive officer of MPLX to the effect that the foregoing closing conditions have been satisfied; and

 

   

ANDX must have received an opinion from Vinson & Elkins L.L.P. related to certain tax matters as outlined in the Merger Agreement.

Termination

ANDX and MPLX may terminate the Merger Agreement and abandon the Merger at any time prior to the effective time of the Merger by mutual written consent of ANDX and MPLX.

The Merger Agreement may also be terminated and abandoned by either ANDX or MPLX if:

 

   

the completion of the Merger does not occur by the termination date; or

 

   

any order permanently restraining, enjoining or otherwise prohibiting consummation of the Merger shall become final and non-appealable;

provided that the right to terminate the Merger Agreement as described above will not be available to any party that has breached in any material respect its obligations under the Merger Agreement in any matter that shall have proximately contributed to the occurrence of the failure of a condition to the consummation of the Merger.

In addition, the Merger Agreement may be terminated and abandoned by ANDX and ANDX GP if there has been a breach of any representation, warranty, covenant or agreement made by MPLX, MPLX GP or Merger Sub in the Merger Agreement, or any such representation and warranty shall have become untrue after the date of the Merger Agreement, such that the condition to closing relating to the accuracy of the representations of MPLX and MPLX GP or the condition to closing relating to the covenants or agreements of MPLX and MPLX GP would not be satisfied, and such breach or condition is not curable or, if curable, is not cured by the termination date.

The Merger Agreement may be further terminated or abandoned by MPLX and MPLX GP if there has been a breach of any representation, warranty, covenant or agreement made by ANDX and ANDX GP in the Merger Agreement, or any such representation and warranty shall have become untrue after the date of the Merger Agreement, such that the condition to closing relating to the accuracy of the representations of ANDX and ANDX GP, or the condition to closing relating to the covenants or agreements of ANDX and ANDX GP would not be satisfied, and such breach or condition is not curable or, if curable, is not cured by the termination date.

 

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Expenses

Whether or not the Merger is consummated, all costs and expenses incurred in connection with the Merger Agreement, including legal fees, accounting fees, financial advisory fees and other professional and non-professional fees and expenses, will be paid by the party incurring such expenses, except that MPLX and ANDX shall each pay for one-half of: (a) any filing fees with respect to the registration statement of which this consent statement/prospectus forms a part and (b) the costs of printing and mailing this consent statement/prospectus.

Indemnification; Directors’ and Officers’ Insurance

The parties to the Merger Agreement have agreed that, from and after the effective time of the Merger and to the fullest extent permitted under applicable law, MPLX and the surviving entity in the Merger will indemnify and hold harmless (and advance expenses as incurred), each present and former director and officer of ANDX GP, each known as an indemnified person, from and against any costs or expenses (including reasonable attorneys’ fees), judgments, fines, losses, claims, damages or liabilities incurred in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of or related to such indemnified person’s service as a director or officer of ANDX GP or employee of ANDX or ANDX GP or services performed by such person at the request of ANDX or ANDX GP (including acting, at the request of ANDX or ANDX GP, as a director, officer, employee, partner, manager, fiduciary or trustee of any other person) at or prior to the effective time of the Merger, whether asserted or claimed prior to, at or after the effective time of the Merger.

From and after the effective time of the Merger, MPLX and MPLX GP will honor all rights to indemnification, advancement of expenses, elimination of liability and exculpation from liabilities for acts or omissions occurring at or prior to the effective time of the Merger (including the transactions contemplated by the Merger Agreement) existing in favor of each present and former director and officer of ANDX GP as provided in the governing documents of ANDX and ANDX GP, under applicable Delaware law and will ensure that the governing documents of the surviving entity in the Merger will, for a period of six years following the effective time of the Merger, contain provisions substantially no less advantageous with respect to indemnification, advancement of expenses, elimination of liability and exculpation of their present and former directors, officers, employees and agents than are set forth in the governing documents of ANDX as of the date of the Merger Agreement.

For at least six years after the effective time of the Merger, the surviving entity in the Merger will maintain, for the benefit of the directors and officers of ANDX GP as of the effective time of the Merger, an insurance and indemnification policy that provides coverage for events occurring prior to the effective time of the Merger that is substantially equivalent to the existing policies of ANDX and ANDX GP; provided that the annual cost of the insurance shall in no event exceed 300% of the current annual premium paid by ANDX and ANDX GP for such purpose; and provided further, that if the cost of such insurance coverage exceeds such amount, the surviving entity in the Merger will obtain a policy with the greatest coverage available for a cost not exceeding such amount. As an alternative, at or prior to the effective time of the Merger, ANDX and ANDX GP may obtain, at their election, prepaid policies, which provide directors and officers with coverage for at least six years with respect to claims arising from facts or events that occurred on or before the effective time of the Merger; provided that ANDX and ANDX GP shall in no event spend more than an amount equal to six multiplied by 300% of the current annual premium paid by ANDX and ANDX GP for the existing policies of ANDX and ANDX GP. Any such prepaid policies obtained prior to the effective time of the Merger must be maintained in full force and effect and the obligations thereunder be honored. Any successors and assigns of MPLX and MPLX GP or the surviving entity in the Merger will be obligated to assume their indemnification obligations under the Merger Agreement.

 

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Indemnified persons will have the right to enforce the provisions of the Merger Agreement relating to their indemnification.

Modification and Amendment

At any time prior to the effective time of the Merger, the Merger Agreement may be modified or amended by written agreement of the parties, by action taken or authorized by the ANDX Conflicts Committee (in the case of ANDX or ANDX GP) and the MPLX Board (in the case of MPLX or MPLX GP). However, the MPLX Board may not take or authorize any such action without prior written approval of the MPLX Conflicts Committee.

Remedies

In the event of termination of the Merger Agreement pursuant to the provisions described in the section entitled “Termination” beginning on page 96, the Merger Agreement (other than certain provisions as set forth in the Merger Agreement) will become void and of no effect with no liability on the part of any party to the Merger Agreement (or of any of its representatives or affiliates). However, except as otherwise expressly provided in the Merger Agreement, no termination shall relieve any party to the Merger Agreement of any liability or damages to the other party resulting from any knowing and intentional material breach of the Merger Agreement.

Support Agreement

Concurrently with the execution of the Merger Agreement, MPLX, ANDX, ANDX GP, ANDX Refining Southwest and MPC entered into the Support Agreement, pursuant to which, subject to the terms and conditions therein, ANDX GP and ANDX Refining Southwest have agreed to deliver a written consent covering all of the ANDX Common Units beneficially owned by them (the “Covered Units”) within two business days after the registration statement of which this consent statement/prospectus forms a part becomes effective under the Securities Act, approving the Merger, Merger Agreement and any other matters necessary for consummation of the Merger and the other transactions contemplated in the Merger Agreement.

The Support Agreement also generally prohibits ANDX GP and ANDX Refining Southwest from transferring the Covered Units. The Support Agreement terminates upon the earliest to occur of the termination of the Merger Agreement, the time the Merger becomes effective and the written agreement of the parties to the Support Agreement to terminate the Support Agreement.

Amendment to Omnibus Agreement

Prior to the Closing, MPC, ANDX GP and ANDX shall take all actions as are necessary and appropriate to amend the Fourth Amended and Restated Omnibus Agreement, dated effective as of October 30, 2017, by and among Andeavor, ANDX, ANDX GP and the other parties thereto, as amended as of the date hereof (including by that certain First Amendment to Fourth Amended and Restated Omnibus Agreement, dated as of January 30, 2019, the “Omnibus Agreement”), effective as of the Closing Date and in such form as is reasonably acceptable to MPLX, to reflect the admission of the New ANDX General Partner as the general partner of the surviving entity in the Merger and provide that a “Partnership Change of Control” (as defined in the Omnibus Agreement) shall not be deemed to occur unless and until MPC no longer directly or indirectly controls the general partner of ANDX.

 

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MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

The following is a discussion of the material U.S. federal income tax consequences of the Merger that may be relevant to ANDX Unitholders. Unless otherwise noted, the legal conclusions set forth in the discussion relating to the consequences of the Merger to ANDX and ANDX Unitholders are the opinion of Vinson & Elkins L.L.P., counsel to ANDX, as to the material U.S. federal income tax consequences relating to those matters. This discussion is based upon current provisions of the Code, existing and proposed Treasury regulations promulgated under the Code (the “Treasury Regulations”) and current administrative rulings and court decisions, all of which are subject to change, possibly with retroactive effect. Changes in these authorities may cause the tax consequences to vary substantially from the consequences described below.

This discussion does not purport to be a complete discussion of all U.S. federal income tax consequences of the Merger. Moreover, the discussion focuses on ANDX Unitholders who are individual citizens or residents of the United States (for U.S. federal income tax purposes) and has only limited application to corporations, estates, trusts, nonresident aliens or other unitholders subject to specialized tax treatment, such as tax-exempt institutions, employee benefit plans, foreign persons, financial institutions, insurance companies, real estate investment trusts (REITs), individual retirement accounts (IRAs), mutual funds, traders in securities that elect mark-to-market, persons who hold ANDX Common Units or ANDX Series A Preferred Units (or who will hold MPLX Common Units or MPLX Series B Preferred Units after the Merger) as part of a hedge, straddle or conversion transaction, persons who acquired ANDX Common Units or ANDX Series A Preferred Units by gift, or directors and employees of ANDX that received (or are deemed to receive) ANDX Common Units as compensation or through the exercise (or deemed exercise) of options, unit appreciation rights, phantom units or restricted units granted under an ANDX equity incentive plan. Also, the discussion assumes that ANDX Unitholders acquired their ANDX Common Units or ANDX Series A Preferred Units, as applicable, for cash and that such units are held as capital assets at the time of the Merger (generally, property held for investment).

Neither ANDX nor MPLX has sought a ruling from the IRS with respect to any of the tax consequences discussed below, and the IRS would not be precluded from taking positions contrary to those described herein. As a result, no assurance can be given that the IRS will agree with all of the tax characterizations and the tax consequences described below. Some tax aspects of the Merger are not certain, and no assurance can be given that the below-described opinions and/or the statements contained herein with respect to tax matters would be sustained by a court if contested by the IRS. Furthermore, the tax treatment of the Merger may be significantly modified by future legislative or administrative changes or court decisions. Any modifications may or may not be retroactively applied.

Accordingly, ANDX and MPLX strongly urge each ANDX Unitholder to consult with, and depend upon, such unitholder’s own tax advisor in analyzing the U.S. federal, state, local and foreign tax consequences of the Merger particular to the unitholder.

Tax Opinions Required as a Condition to Closing

No ruling has been or will be requested from the IRS with respect to the tax consequences of the Merger. Instead, ANDX and MPLX will rely on the opinions of their respective counsel regarding the tax consequences of the Merger.

It is a condition of MPLX’s obligation to complete the Merger that MPLX receive an opinion of its counsel, Jones Day, to the effect that for U.S. federal income tax purposes:

 

   

MPLX should not recognize any income or gain as a result of the Merger; and

 

   

no gain or loss should be recognized by MPLX Common Unitholders and holders of MPLX Series A Preferred Units as a result of the Merger (other than any gain resulting from any decrease in partnership liabilities pursuant to Section 752 of the Code).

 

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It is a condition of ANDX’s obligation to complete the Merger that ANDX receive an opinion of its counsel, Vinson & Elkin L.L.P., to the effect that for U.S. federal income tax purposes:

 

   

ANDX should not recognize any income or gain as a result of the Merger; and

 

   

no gain or loss should be recognized by holders of ANDX Common Units and ANDX Series A Preferred Units as a result of the Merger (other than any gain resulting from (A) any decrease in partnership liabilities pursuant to Section 752 of the Code, (B) a disguised sale attributable to contributions of cash or other property to ANDX after the date of the Merger Agreement and prior to the effective time of the Merger, (C) the receipt of any non-pro rata merger consideration, or (D) the receipt of cash paid in lieu of fractional units pursuant to the Merger Agreement).

It is a condition of each of MPLX’s and ANDX’s obligation to complete the Merger that:

 

   

MPLX shall have received an opinion of Jones Day dated as of the Closing Date to the effect that (A) at least 90% of the gross income of MPLX for (1) all of the calendar year that immediately precedes the calendar year that includes the Closing Date and (2) each calendar quarter of the calendar year that includes the Closing Date for which the necessary financial information is available is “qualifying income” within the meaning of Section 7704(d) of the Code and (B) at least 90% of the combined gross income of each of MPLX and ANDX for (1) all of the calendar year that immediately precedes the calendar year that includes the Closing Date and (2) each calendar quarter of the calendar year that includes the Closing Date for which the necessary financial information is available is “qualifying income” within the meaning of Section 7704(d) of the Code; and

 

   

ANDX shall have received an opinion of Vinson & Elkins L.L.P. dated as of the Closing Date to the effect that at least 90% of the gross income of ANDX for (A) all of the calendar year that immediately precedes the calendar year that includes the Closing Date and (B) each calendar quarter of the calendar year that includes the Closing Date for which the necessary financial information is available is “qualifying income” within the meaning of Section 7704(d) of the Code.

The opinions of counsel will assume that the Merger will be consummated in the manner contemplated by, and in accordance with, the terms set forth in the Merger Agreement and described in this consent statement/prospectus. In addition, the tax opinions delivered to MPLX and ANDX at closing will be based upon certain factual assumptions, representations and covenants made by the officers of MPLX, ANDX, MPLX GP and ANDX GP and any of their respective affiliates. If there are material changes to the tax consequences of the Merger and either MPLX or ANDX waives the receipt of the requisite tax opinion as a condition to closing, then this consent statement/prospectus will be amended and recirculated and unitholder approval will be resolicited. Unlike a ruling, an opinion of counsel represents only that counsel’s best legal judgment and does not bind the IRS or the courts. Accordingly, no assurance can be given that the above-described opinions will be sustained by a court if contested by the IRS.

Collectively these opinions of counsel are defined herein as the “Merger Opinions.”

Assumptions Related to the U.S. Federal Income Tax Treatment of the Merger

The expected U.S. federal income tax consequences of the Merger are dependent upon ANDX and MPLX being treated as partnerships for U.S. federal income tax purposes at the time of the Merger. If ANDX or MPLX were to be treated as a corporation for U.S. federal income tax purposes at the time of the Merger, the consequences of the Merger would be materially different. If MPLX were to be treated as a corporation for U.S. federal income tax purposes, the Merger would likely be a fully taxable transaction to the ANDX Unitholders.

The discussion below assumes that each of ANDX and MPLX will be classified as a partnership for U.S. federal income tax purposes at the time of the Merger and that following the Merger, MPLX will be treated as the continuing partnership for U.S. federal income tax purposes. Please read the discussion of the opinion of

 

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Jones Day that MPLX is classified as a partnership for U.S. federal income tax purposes and the discussion of the opinion of Vinson & Elkins L.L.P. that ANDX is classified as a partnership for U.S. federal income tax purposes under the section entitled “—U.S. Federal Income Tax Treatment of the Merger” below.

Additionally, the discussion below assumes that all of the liabilities of ANDX that are deemed assumed by MPLX in the Merger qualify for an exception to the “disguised sale” rules. MPLX and ANDX believe that such liabilities qualify for one or more of the exceptions to the “disguised sale” rules and intend to take the position that neither MPLX nor ANDX will recognize any income or gain as a result of the “disguised sale” rules with respect to such liabilities.

U.S. Federal Income Tax Treatment of the Merger

Upon the terms and subject to the conditions set forth in the Merger Agreement, a subsidiary of MPLX will merge with and into ANDX and (i) all ANDX Common Units will be converted into the right to receive MPLX Common Units and (ii) all ANDX Series A Preferred Units will be converted into the right to receive MPLX Series B Preferred Units. For U.S. federal income tax purposes, the Merger will be a “merger” of MPLX and ANDX within the meaning of the Treasury Regulations promulgated under Section 708 of the Code, with MPLX treated as the resulting partnership and ANDX treated as the terminated partnership.

As a result, the following is deemed to occur for U.S. federal income tax purposes: (1) ANDX will be deemed to contribute all of its assets to MPLX in exchange for (i) MPLX Common Units, MPLX Series B Preferred Units, MPLX TexNew Mex Units and the MPLX Special Limited Partner Interest, (ii) the assumption of ANDX’s liabilities, and (iii) cash received in lieu of fractional MPLX Common Units, followed by (2) a liquidation of ANDX in which (i) MPLX Common Units and cash are distributed to the holders of ANDX Common Units, (ii) MPLX Series B Preferred Units are distributed to the holders of the ANDX Series A Preferred Units, (iii) MPLX TexNew Mex Units are distributed to the holder of ANDX TexNew Mex Units, and (iv) the MPLX Special Limited Partner Interest is distributed to the holder of the ANDX Special Limited Partner Interest (the “Assets-Over Form”).

The remainder of this discussion, except as otherwise noted, assumes that the Merger and the transactions contemplated thereby will be treated for U.S. federal income tax purposes in the manner described above. For the purposes of this discussion, and based upon the assumptions and representations referenced above, Jones Day is of the opinion that MPLX will be treated as a partnership for U.S. federal income tax purposes immediately preceding the Merger. The representations upon which Jones Day has relied in rendering its opinion include, without limitation: (1) neither MPLX nor any of MPLX’s partnership or limited liability company subsidiaries, other than those identified as such to Jones Day, have elected or will elect to be treated as a corporation for U.S. federal income tax purposes and (2) for each taxable year, more than 90% of MPLX’s gross income has been and will be income of the type that Jones Day has opined or will opine is “qualifying income” within the meaning of Section 7704(d) of the Code. In addition, for the purposes of this discussion, and based upon the assumptions and representations referenced above, Vinson & Elkins L.L.P. is of the opinion that ANDX will be treated as a partnership for U.S. federal income tax purposes immediately preceding the Merger. The representations upon which Vinson & Elkins L.L.P. has relied in rendering its opinion include, without limitation: (1) neither ANDX nor any of its partnership or limited liability company subsidiaries, other than those identified as such to Vinson & Elkins L.L.P., has elected or will elect to be treated as a corporation for U.S. federal income tax purposes, and (2) for each taxable year of its existence, more than 90% of ANDX’s gross income has been and will be income of a type that Vinson & Elkins L.L.P. has opined or will opine is “qualifying income” within the meaning of Section 7704(d) of the Code.

Tax Consequences of the Merger to ANDX

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MPLX Special Limited Partner Interest, the assumption of ANDX’s liabilities, and cash in lieu of fractional MPLX Common Units. In general, the deemed contribution of assets from ANDX to MPLX in exchange for MPLX Common Units, MPLX Series B Preferred Units, MPLX TexNew Mex Units, and the MPLX Special Limited Partner Interest will not result in the recognition of gain or loss by ANDX. The actual and deemed receipt of cash by ANDX, however, could give rise to the recognition of taxable gain by ANDX, and any such taxable gain would be allocated to the holders of ANDX Common Units pursuant to the ANDX Partnership Agreement. The deemed receipt of cash by ANDX could give rise to a partially taxable “disguised sale” of assets from ANDX to MPLX. Under Section 707 of the Code and the Treasury Regulations promulgated thereunder (the “disguised sale rules”), a transfer of property (other than money) by a partner to a partnership and a transfer of money or other consideration (other than an interest in such partnership) by the partnership to such partner (including the partnership’s assumption of, or taking of property subject to, certain liabilities), may, in certain circumstances, be characterized, in whole or in part, as a “disguised sale” of property by the partner to the partnership, rather than as a non-taxable contribution of such property to the partnership. The deemed receipt of cash from MPLX is expected to qualify for one or more exceptions to “disguised sale” treatment and therefore might not be treated as part of a disguised sale of property by ANDX to MPLX.

Further, under the disguised sale rules, a contribution of cash or other property by a partner to a partnership and a transfer of property (other than an interest in such partnership) by the partnership to such partner, may, in certain circumstances, also be characterized, in whole or in part, as a “disguised sale” of property by the partnership to the partner, rather than as a non-taxable distribution of such property by the partnership. Although not contemplated, contributions of cash or other property to ANDX after the date of the Merger Agreement and prior to the effective time of the Merger, if any, may be treated as part of a “disguised sale” of a portion of the MPLX Common Units received in the Merger and may result in gain to ANDX. Any such taxable gain recognized by ANDX as part of a “disguised sale” would be allocated to the ANDX Common Unitholders pursuant to the ANDX Partnership Agreement.

Tax Consequences of the Merger to ANDX Unitholders

Under the Assets-Over Form, (i) ANDX Common Unitholders will be deemed to receive distributions in liquidation of ANDX consisting of MPLX Common Units and any cash in lieu of fractional MPLX Common Units and (ii) ANDX Series A Preferred Unitholders will be deemed to receive distributions in liquidation of ANDX consisting of MPLX Series B Preferred Units. In general, the receipt of MPLX Common Units or MPLX Series B Preferred Units will not result in the recognition of taxable gain or loss to such unitholders. The receipt of cash by a holder of ANDX Common Units (including, as discussed below, a deemed distribution of cash resulting from a net reduction in the amount of nonrecourse liabilities allocated to such unitholder) will result in the recognition of taxable gain if such actual or deemed receipt of cash exceeds such ANDX Common Unitholder’s adjusted tax basis in the ANDX Common Units surrendered in the Merger.

As a partner in ANDX, an ANDX Common Unitholder is entitled to include the nonrecourse liabilities of ANDX attributable to its ANDX Common Units in the tax basis of its ANDX Common Units. As a partner in MPLX after the Merger, an ANDX Common Unitholder will be entitled to include the nonrecourse liabilities of MPLX attributable to the MPLX Common Units received in the Merger in the tax basis of such units received. The nonrecourse liabilities of MPLX will include the nonrecourse liabilities of ANDX after the Merger. The amount of nonrecourse liabilities attributable to an ANDX Common Unit or an MPLX Common Unit is determined under complex federal income tax regulations. An ANDX Series A Preferred Unitholder is not allocated any share of ANDX’s liabilities and will not be allocated any share of MPLX’s liabilities. As a result, there should be no net change in the amount of liabilities allocated to an ANDX Series A Preferred Unitholder.

If the nonrecourse liabilities attributable to the MPLX Common Units received by an ANDX Common Unitholder in the Merger exceed the nonrecourse liabilities attributable to the ANDX Common Units surrendered by such ANDX Common Unitholder in the Merger, such ANDX Common Unitholder’s tax basis in the MPLX Common Units received will be correspondingly higher than such unitholder’s tax basis in the ANDX Common

 

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Units surrendered. If the nonrecourse liabilities attributable to the MPLX Common Units received by an ANDX Common Unitholder in the Merger are less than the nonrecourse liabilities attributable to the ANDX Common Units surrendered by such ANDX Common Unitholder in the Merger, such ANDX Common Unitholder’s tax basis in the MPLX Common Units received will be correspondingly lower than the unitholder’s tax basis in the ANDX Common Units surrendered. Please read the section entitled “—Tax Basis and Holding Period of the MPLX Units Received” below.

Any reduction in a unitholder’s share of nonrecourse liabilities described in the preceding paragraph will be treated as a deemed cash distribution to an ANDX Common Unitholder. Additionally, an ANDX Common Unitholder will receive a cash distribution in lieu of any fractional units in the Merger. If the amount of any such actual or deemed distributions of cash to an ANDX Common Unitholder exceeds such ANDX Common Unitholder’s tax basis in the ANDX Common Units surrendered, such ANDX Common Unitholder will recognize taxable gain in an amount equal to such excess. While there can be no assurance, MPLX and ANDX expect that most ANDX Common Unitholders will not recognize gain in this manner, and that no ANDX Series A Preferred Unitholder will recognize gain in this manner. However, the application of the rules governing the allocation of nonrecourse liabilities in the context of the Merger is complex and subject to uncertainty. There can be no assurance that an ANDX Common Unitholder will not recognize gain as a result of the distributions deemed received by such ANDX Common Unitholder as a result of a net decrease in the amount of nonrecourse liabilities allocable to such ANDX Common Unitholder as a result of the Merger and the amount of cash for fractional MPLX Common Units actually received by such ANDX Common Unitholder in the Merger.

Additionally, holders of ANDX Common Units outstanding immediately prior to the effective time of the Merger will be entitled to receive MPLX Common Units in the Merger in exchange for such holder’s ANDX Common Units at the Public Unitholder Exchange Ratio or the Affiliated Unitholder Exchange Ratio, as applicable. As a result, public holders of ANDX Common Units could be deemed, for U.S. federal income tax purposes, to have received an amount of consideration disproportionate to their pro rata share of the value of their ANDX Common Units, with any amount in excess of such pro rata share treated as a taxable transfer to such holders, which could be includible in gross income. ANDX will specially allocate unrealized gain and loss to the capital accounts of ANDX Common Unitholders in an effort to achieve relative capital accounts consistent with the applicable exchange ratio. In the event such allocations are insufficient, ANDX may specially allocate gross income and loss among the ANDX Common Unitholders in the ANDX taxable period ending on the effective date of the Merger to achieve capital accounts consistent with the Public Unitholder Exchange Ratio and the Affiliated Unitholder Exchange Ratio, as applicable. Although unlikely, other characterizations are possible, and the IRS could take the position that a public holder of ANDX Common Units is required to recognize taxable income with respect to any excess consideration such holder is deemed to receive in the Merger.

The amount and effect of any gain that may be recognized by an ANDX Unitholder will depend on such unitholder’s particular situation, including the ability of the affected ANDX Unitholder to utilize any suspended passive losses. Depending on these factors, any particular affected ANDX Unitholder may, or may not, be able to offset all or a portion of any gain recognized. Each ANDX Unitholder should consult such unitholder’s own tax advisor in analyzing whether the Merger causes such unitholder to recognize actual and/or deemed distributions in excess of the tax basis of his ANDX Common Units or ANDX Series A Preferred Units surrendered in the Merger.

Tax Basis and Holding Period of the MPLX Units Received

An ANDX Common Unitholder has an initial tax basis in its ANDX Common Units, which consists of the amount such ANDX Common Unitholder paid for such ANDX Common Units plus such ANDX Common Unitholder’s share of ANDX’s nonrecourse liabilities. That basis has been and will be increased by such ANDX Common Unitholder’s share of income (including such holder’s share of income for the taxable period ending on

 

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the effective date of the Merger) and by any increases in such ANDX Common Unitholder’s share of nonrecourse liabilities. That basis has been and will be decreased, but not below zero, by distributions, by such ANDX Common Unitholder’s share of losses (including such holder’s share of losses for the taxable period ending on the effective date of the Merger), by any decreases in such ANDX Common Unitholder’s share of nonrecourse liabilities and by such ANDX Common Unitholder’s share of expenditures that are not deductible in computing taxable income and are not required to be capitalized.

An ANDX Common Unitholder will have an initial aggregate tax basis in the MPLX Common Units that such ANDX Common Unitholder receives in the Merger equal to (x) such ANDX Common Unitholder’s adjusted tax basis in the ANDX Common Units exchanged therefor, decreased by (y) (i) any basis attributable to such ANDX Common Unitholder’s share of ANDX’s nonrecourse liabilities and (ii) any cash received in the Merger, and increased by (z) such ANDX Common Unitholder’s share of MPLX’s nonrecourse liabilities immediately after the Merger. In addition, the tax basis in the MPLX Common Units received in the Merger by an ANDX Common Unitholder will be increased by the amount of any income or gain recognized by such ANDX Common Unitholder pursuant to the transactions contemplated by the Merger.

An ANDX Series A Preferred Unitholder has an initial tax basis in its ANDX Series A Preferred Units equal to the amount such ANDX Series A Preferred Unitholder paid for such ANDX Series A Preferred Units. That basis has generally not been and will not be increased or decreased by any allocation of income, gain, loss or deduction by ANDX to such ANDX Series A Preferred Unitholder or by any distribution to such ANDX Series A Preferred Unitholder. As a result, an ANDX Series A Preferred Unitholder should have an initial aggregate tax basis in the MPLX Series B Preferred Units that such ANDX Series A Preferred Unitholder receives in the Merger equal the amount such ANDX Series A Preferred Unitholder paid for such ANDX Series A Preferred Units.

As a result of the Assets-Over Form, an ANDX Unitholder will have a holding period in the MPLX Common Units or MPLX Series B Preferred Units, as applicable, received in the Merger that is not determined by reference to its holding period in its ANDX units exchanged therefor. Instead, such ANDX Unitholder’s holding period in the MPLX Common Units or MPLX Series B Preferred Units, as applicable, received in the Merger that are attributable to ANDX’s capital assets or assets used in its business as defined in Section 1231 of the Code will include ANDX’s holding period in those assets. The holding period for MPLX Common Units or MPLX Series B Preferred Units, as applicable, received by an ANDX Unitholder attributable to other assets of ANDX, such as inventory and receivables, will begin on the day following the Merger.

Effect of Termination of ANDX’s Tax Year at Closing of Merger

ANDX uses the year ending December 31 as its taxable year and the accrual method of accounting for U.S. federal income tax purposes. As a result of the Merger, ANDX’s taxable year will end as of the effective date of the Merger, and ANDX will be required to file a final U.S. federal income tax return for the taxable year ending upon the effective date of the Merger. Each ANDX Unitholder will receive a Schedule K-1 from ANDX for the taxable year ending upon the effective date of the Merger and will be required to include in income its share of income, gain, loss and deduction for this period. In addition, an ANDX Unitholder who has a taxable year ending on a date other than December 31 and after the date the Merger is effected must include its share of income, gain, loss and deduction in income for its taxable year, with the result that the ANDX Unitholder will be required to include in income for its taxable year its share of more than one year of income, gain, loss and deduction from ANDX.

 

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MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF MPLX UNIT OWNERSHIP

This section is a summary of certain of the material U.S. federal income tax considerations that may be relevant to ANDX Unitholders entitled to receive Merger consideration in connection with the Merger who are individual citizens or residents of the U.S. and, unless otherwise noted in the following discussion, is the opinion of Jones Day, counsel to MPLX and MPLX GP, insofar as it relates to legal conclusions with respect to matters of U.S. federal income tax law. Except for the Merger Opinions, which will be given at the effective time of the Merger (as discussed in more detail below in the section entitled “Material U.S. Federal Income Tax Consequences of the Merger”), and unless otherwise noted, this section is based upon current provisions of the Code, Treasury Regulations, and current administrative rulings and court decisions, all of which are subject to change, possibly with retroactive effect. Later changes in these authorities may cause the tax consequences to vary substantially from the consequences described below.

The following discussion does not comment on all U.S. federal income tax matters affecting MPLX or MPLX unitholders. Moreover, the discussion focuses on unitholders who are individual citizens or residents of the U.S. and has only limited application to corporations, estates, entities treated as partnerships for U.S. federal income tax purposes, trusts, nonresident aliens, U.S. expatriates and former citizens or long-term residents of the United States or other unitholders subject to specialized tax treatment, such as banks, insurance companies and other financial institutions, tax-exempt institutions, foreign persons (including, without limitation, controlled foreign corporations, passive foreign investment companies and non-U.S. persons eligible for the benefits of an applicable income tax treaty with the United States), individual retirement accounts, or “IRAs,” real estate investment trusts or mutual funds, dealers in securities or currencies, traders in securities, U.S. persons whose “functional currency” is not the U.S. dollar, persons holding their units as part of a “straddle,” “hedge,” “conversion transaction” or other risk reduction transaction, and persons deemed to sell their units under the constructive sale provisions of the Code. In addition, the discussion only comments to a limited extent on state, local and foreign tax consequences. Accordingly, we encourage each ANDX Unitholder to consult his or her own tax advisor in analyzing the state, local and foreign tax consequences particular to him or her of the ownership or disposition of MPLX Common Units or MPLX Series B Preferred Units and potential changes in applicable tax laws.

The IRS has issued us private letter rulings confirming that a portion of MPLX’s operations generates “qualifying income” under Section 7704 of the Code. Otherwise, the IRS has made no determination as to MPLX’s status or the status of MPLX’s operating subsidiaries for federal income tax purposes or whether MPLX’s operations generate “qualifying income” under Section 7704 of the Code. Instead, we will rely on opinions of Jones Day. Unlike a ruling, an opinion of counsel represents only that counsel’s best legal judgment and does not bind the IRS or the courts. Accordingly, the opinions and statements made herein may not be sustained by a court if contested by the IRS. Any contest of this sort with the IRS may materially and adversely impact the market for the units and the prices at which units trade. In addition, the costs of any contest with the IRS, principally legal, accounting and related fees, will result in a reduction in cash available for distribution to MPLX’s unitholders and thus will be borne indirectly by MPLX’s unitholders. Furthermore, the tax treatment of MPLX, or of an investment in MPLX, may be significantly modified by future legislative or administrative changes or court decisions. Any modifications may or may not be retroactively applied.

All statements as to matters of U.S. federal income tax law and legal conclusions with respect thereto, but not as to factual matters, contained in this section, unless otherwise noted, are the opinion of Jones Day and are based on the accuracy of the representations made by MPLX. Jones Day (as counsel to MPLX) and Vinson & Elkins L.L.P. (as tax counsel to ANDX) will issue their respective Merger Opinions as discussed in more detail in the section entitled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 99.

For the reasons described below, Jones Day has not rendered an opinion with respect to the following specific U.S. federal income tax issues: (i) the treatment of a unitholder whose units are loaned to a short seller to cover a short sale of units (please read the section entitled “—Treatment of Short Sales”); (ii) whether MPLX

 

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monthly convention for allocating taxable income and losses is permitted by existing Treasury Regulations (please read the section entitled “—Disposition of Units—Allocations Between Transferors and Transferees”); (iii) whether MPLX method for taking into account Section 743 adjustments is sustainable in certain cases (please read the section entitled “—Section 754 Election” and “—Disposition of Units—Uniformity of Units”); and (iv) whether an ANDX Common Unitholder will be able to utilize suspended passive losses related to its ANDX Common Units to offset income from MPLX (please read the section entitled “—Limitation on Deductibility of Losses” and “—Disposition of Units—Uniformity of Units.”).

Partnership Status

A partnership is not a taxable entity and incurs no U.S. federal income tax liability. Instead, each partner of a partnership is required to take into account his or her share of items of income, gain, loss and deduction of the partnership in computing his or her U.S. federal income tax liability, regardless of whether cash distributions are made to him or her by the partnership. Distributions by a partnership to a partner are generally not taxable to the partnership or the partner unless the amount of cash distributed to him or her is in excess of the partner’s adjusted tax basis in his or her partnership interest. Section 7704 of the Code provides that publicly traded partnerships will, as a general rule, be taxed as corporations. However, an exception, referred to as the “Qualifying Income Exception,” exists with respect to publicly traded partnerships of which 90.0% or more of the gross income for every taxable year consists of “qualifying income.” Qualifying income includes income and gains derived from the transportation, processing, storage and marketing of crude oil, natural gas and products thereof. Other types of qualifying income include interest (other than from a financial business), dividends, gains from the sale of real property and gains from the sale or other disposition of capital assets held for the production of income that otherwise constitutes qualifying income. Based on estimates consistent with MPLX’s last quarterly earning disclosure and MPLX’s expectations about changes in relative income sources, including changes from the Merger, we estimate that less than 2.0% of MPLX’s current gross income on a pro forma basis is not qualifying income; however, this estimate could change from time to time. Based upon and subject to this estimate, the factual representations made by MPLX and MPLX GP and a review of the applicable legal authorities, Jones Day is of the opinion that at least 90.0% of MPLX’s current gross income constitutes qualifying income. The portion of MPLX’s income that is qualifying income may change from time to time.

The IRS has issued MPLX private letter rulings confirming that a portion of MPLX’s operations generates “qualifying income” under Section 7704 of the Code. Otherwise, the IRS has made no determination as to MPLX’s status or the status of MPLX’s operating subsidiaries for U.S. federal income tax purposes or whether MPLX’s operations generate “qualifying income” under Section 7704 of the Code. Instead, MPLX will rely on the opinion of Jones Day on such matters. It is the opinion of Jones Day that, based upon the Code, its regulations, published revenue rulings and court decisions, on MPLX’s private letter ruling, and on the representations described below that:

 

   

MPLX will be classified as a partnership for U.S. federal income tax purposes; and

 

   

Each of MPLX’s operating subsidiaries will, except as otherwise identified to Jones Day, be treated as a partnership or will be disregarded as an entity separate from us for U.S. federal income tax purposes.

In rendering its opinion, Jones Day has relied on factual representations made by MPLX. The representations made by us upon which Jones Day has relied include:

 

   

Neither MPLX nor any of its operating subsidiaries, except as otherwise identified to Jones Day, has elected or will elect to be treated as a corporation; and

 

   

For each taxable year, more than 90.0% of MPLX’s gross income has been and will be income of the type that Jones Day has opined or will opine is “qualifying income” within the meaning of Section 7704(d) of the Code.

 

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MPLX believes that these representations have been true in the past and expect that these representations will continue to be true in the future.

On January 24, 2017, final regulations regarding which activities give rise to “qualifying income” within the meaning of Section 7704 of the Code were published in the Federal Register. MPLX does not believe these final regulations affect its ability to be treated as a partnership for U.S. federal income tax purposes.

If MPLX fails to meet the Qualifying Income Exception, other than a failure that is determined by the IRS to be inadvertent and that is cured within a reasonable time after discovery (in which case the IRS may also require MPLX to make adjustments with respect to MPLX’s unitholders or pay other amounts), MPLX will be treated as if we had transferred all of its assets, subject to liabilities, to a newly formed corporation, on the first day of the year in which MPLX fails to meet the Qualifying Income Exception, in return for stock in that corporation, and then distributed that stock to the unitholders in liquidation of their interests in MPLX. This deemed contribution and liquidation should be tax-free to unitholders and us so long as MPLX, at that time, do not have liabilities in excess of the tax basis of its assets. Thereafter, MPLX would be treated as a corporation for U.S. federal income tax purposes.

If MPLX were treated as a corporation for U.S. federal income tax purposes in any taxable year, either as a result of a failure to meet the Qualifying Income Exception or otherwise, its items of income, gain, loss and deduction would be reflected only on its corporate income tax return rather than being passed through to MPLX’s unitholders, and MPLX’s net income would be taxed to MPLX at corporate rates. In addition, any distribution made to a unitholder would be treated as taxable dividend income, to the extent of MPLX’s current and accumulated earnings and profits, or, in the absence of earnings and profits, a nontaxable return of capital, to the extent of the unitholder’s tax basis in his or her units, or taxable capital gain, after the unitholder’s tax basis in his or her units is reduced to zero. Accordingly, taxation as a corporation would result in a material reduction in any unitholder’s cash flow and after-tax return and thus would likely result in a substantial reduction of the value of the units.

The discussion below is based on Jones Day’s opinion that MPLX will be classified as a partnership for federal income tax purposes.

Limited Partner Status

Holders of common units of MPLX will be treated as partners of MPLX for U.S. federal income tax purposes. Also, unitholders whose common units are held in street name or by a nominee and who have the right to direct the nominee in the exercise of all substantive rights attendant to the ownership of their common units will be treated as partners of MPLX for U.S. federal income tax purposes.

A beneficial owner of units whose units have been transferred to a short seller to complete a short sale would appear to lose his or her status as a partner with respect to those units for U.S. federal income tax purposes. Please read the section entitled “—Treatment of Short Sales” beginning on page 113.

Income, gain, deductions or losses would not appear to be reportable by any unitholder who is not a partner for federal income tax purposes, and any cash distributions received by any unitholder who is not a partner for federal income tax purposes would therefore appear to be fully taxable as ordinary income. These holders are urged to consult their tax advisors with respect to their tax consequences of holding units in MPLX. The references to “unitholders” in the discussion that follows are to persons who are treated as partners in MPLX for federal income tax purposes.

Tax Consequences of MPLX Common Unit Ownership

Flow-Through of Taxable Income

Subject to the discussion below under the section entitled “Entity-Level Collections” MPLX will not pay any U.S. federal income tax. Instead, each MPLX Common Unitholder will be required to report on his or her

 

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income tax return his or her share of MPLX’s income, gains, losses and deductions without regard to whether MPLX make cash distributions to him or her. Consequently, MPLX may allocate income to an MPLX Common Unitholder even if he or she has not received a cash distribution. Each MPLX Common Unitholder will be required to include in income his or her allocable share of our income, gains, losses and deductions for our taxable year ending with or within his or her taxable year. MPLX’s taxable year ends on December 31.

Treatment of Distributions on MPLX Common Units

Distributions by MPLX to any MPLX Common Unitholder generally will not be taxable to the MPLX Common Unitholder for U.S. federal income tax purposes, except to the extent that the amount of any such cash distribution exceeds his or her tax basis in his or her units immediately before the distribution. MPLX’s cash distributions in excess of any MPLX Common Unitholder’s tax basis generally will be considered to be gain from the sale or exchange of the units, taxable in accordance with the rules described under the section entitled “—Disposition of Common Units.” Any reduction in any MPLX Common Unitholder’s share of MPLX’s liabilities for which no partner, including MPLX GP, bears the economic risk of loss, known as “nonrecourse liabilities,” will be treated as a distribution by us of cash to that MPLX Common Unitholder. To the extent that MPLX’s distributions cause any MPLX Common Unitholder’s “at-risk” amount to be less than zero at the end of any taxable year, he or she must recapture any losses deducted in previous years. Please read the section entitled “—Limitations on Deductibility of Losses.”

A decrease in any MPLX Common Unitholder’s percentage interest in MPLX because of MPLX’s issuance of additional units will decrease his or her share of MPLX’s nonrecourse liabilities, and thus will result in a corresponding deemed distribution of cash. This deemed distribution may constitute a non-pro rata distribution. A non-pro rata distribution of money or property may result in ordinary income to any MPLX Common Unitholder, regardless of his or her tax basis in his or her units, if the distribution reduces the MPLX Common Unitholder’s share of MPLX’s “unrealized receivables,” including depreciation recapture and/or substantially appreciated “inventory items,” each as defined in the Code, and collectively, “Section 751 Assets.” To that extent, the MPLX Common Unitholder will be treated as having been distributed his or her proportionate share of the Section 751 Assets and then having exchanged those assets with MPLX in return for the non-pro rata portion of the actual distribution made to him or her. This latter deemed exchange will generally result in the MPLX Common Unitholder’s realization of ordinary income, which will equal the excess of (i) the non-pro rata portion of that distribution over (ii) the MPLX Common Unitholder’s tax basis (often zero) for the share of Section 751 Assets deemed relinquished in the exchange.

Treatment of MPLX Series B Preferred Units and Distributions Thereon

The U.S. federal income tax treatment of the MPLX Series B Preferred Units is uncertain. MPLX will treat such units as partnership interests and the holders of such units as partners entitled to a guaranteed payment for the use of capital on the MPLX Series B Preferred Units. This is consistent with the historical treatment by ANDX of the ANDX Series A Preferred Unitholders that are receiving the MPLX Series B Preferred Units in the Merger. If the MPLX Series B Preferred Units are not partnership interests, they would likely constitute indebtedness for U.S. federal income tax purposes, in which case distributions or accruals on the MPLX Series B Preferred Units would constitute interest income to their holders. The remainder of this discussion assumes that the MPLX Series B Preferred Units are treated as partnership interests and are not treated as indebtedness for U.S. federal income tax purposes.

Although the IRS may disagree with this treatment, MPLX will treat distributions to holders of the MPLX Series B Preferred Units as guaranteed payments for the use of capital. Guaranteed payments accrued within MPLX’s taxable year will be included as ordinary income to the holders of the MPLX Series B Preferred Units in the taxable year in which MPLX deducts the guaranteed payments, whether or not a distribution of such amounts has actually been made. This is consistent with the historical treatment by ANDX of the ANDX Series A Preferred Unitholders that are receiving the MPLX Series B Preferred Units in the Merger. MPLX expects to

 

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make distributions to the holders of MPLX Series B Preferred Units semi-annually on the 15th day of each February and August of each year up to and including February 15, 2023, and thereafter quarterly on the 15th day of each February, May, August and November, and to report the income related to such expected distributions generally as accruing to the holders of the MPLX Series B Preferred Units on the record date for such distribution. Because a unitholder must recognize income on the guaranteed payments during the taxable year of the accrual, the guaranteed payment attributable to the period beginning and ending December 31st will accrue to the holder of record of an MPLX Series B Preferred Unit on December 31st for such period. A holder of MPLX Series B Preferred Units that has a taxable year ending on a date other than December 31 and that disposes of all its units following the close of MPLX’s taxable year but before the close of its taxable year will be required to include in income for its taxable year its income from more than one year of guaranteed payments. If you are a taxpayer reporting your income using the accrual method or using a taxable year other than the calendar year, you should consult your tax advisor with respect to the consequences of MPLX’s guaranteed payment distribution accrual and reporting convention.

The holders of the MPLX Series B Preferred Units are generally not anticipated to share in MPLX’s items of income, gain, loss or deduction, except to the extent necessary to provide the MPLX Series B Preferred Units with the benefit of their liquidation preference. MPLX will not allocate any share of its nonrecourse liabilities to the MPLX Series B Preferred Units.

If the distributions to the MPLX Series B Preferred Units are not respected as guaranteed payments for the use of capital, holders of such units may be treated as receiving an allocable share of gross income from the Partnership equal to their cash distributions, to the extent the MPLX has sufficient gross income to make such allocations of gross income. In the event there is not sufficient gross income to match such distributions, the distributions to the MPLX Series B Preferred Units would reduce the capital accounts of the MPLX Series B Preferred Units, requiring a subsequent allocation of income or gain to provide the MPLX Series B Preferred Units with their liquidation preference, if possible.

Tax Basis of Units

A unitholder has a single, unified adjusted tax basis in his interests in MPLX, which includes his common units. A unitholder’s initial tax basis for his units will be determined in the manner described in “Material U.S. Federal Income Tax Consequences of the Merger—Tax Basis and Holding Period of the MPLX Units Received” beginning on page 103. That initial tax basis will be increased by his or her share of MPLX’s income and by any increases in his or her share of MPLX’s nonrecourse liabilities. That tax basis will be decreased, but not below zero, by distributions from MPLX, by the unitholder’s share of MPLX’s losses, by any decreases in his or her share of MPLX’s nonrecourse liabilities and by his or her share of MPLX’s expenditures that are not deductible in computing taxable income and are not required to be capitalized. A unitholder will have no share of MPLX’s debt that is recourse to MPLX GP to the extent of the MPLX GP’s “net value” as defined in regulations under Section 752 of the Code, but will have a share, generally based on his or her share of profits, of MPLX’s nonrecourse liabilities. Please read the section entitled “—Disposition of Units—Recognition of Gain or Loss.”

Limitations on Deductibility of Losses

The deduction by any unitholder of his or her share of MPLX’s losses will be limited to the tax basis in his or her units and, in the case of an individual unitholder, any unitholder that is an estate or trust, or a corporate unitholder (if more than 50.0% of the value of the corporate unitholder’s stock is owned directly or indirectly by or for five or fewer individuals or some tax-exempt organizations) to the amount for which the unitholder is considered to be “at risk” with respect to MPLX’s activities, if that is less than his or her tax basis. A unitholder subject to these limitations must recapture losses deducted in previous years to the extent that distributions cause his or her at-risk amount to be less than zero at the end of any taxable year. Losses disallowed to any unitholder or recaptured as a result of these limitations will carry forward and will be allowable as a deduction to the extent

 

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that his or her at-risk amount is subsequently increased, provided such losses do not exceed such unitholder’s tax basis in his or her units. Upon the taxable disposition of a unit, any gain recognized by any unitholder can be offset by losses that were previously suspended by the at-risk limitation but may not be offset by losses suspended by the tax basis limitation. Any loss previously suspended by the at-risk limitation in excess of that gain would no longer be utilizable.

In general, any MPLX Unitholder will be at risk to the extent of the tax basis of his or her units, excluding any portion of that tax basis attributable to his or her share of MPLX’s nonrecourse liabilities, reduced by (i) any portion of that tax basis representing amounts otherwise protected against loss because of a guarantee, stop loss agreement or other similar arrangement and (ii) any amount of money he or she borrows to acquire or hold his or her units, if the lender of those borrowed funds owns an interest in MPLX, is related to the MPLX Unitholder or can look only to the units for repayment. An MPLX Unitholder’s at-risk amount will increase or decrease as the tax basis of the MPLX Unitholder’s units increases or decreases, other than tax basis increases or decreases attributable to increases or decreases in his or her share of MPLX’s nonrecourse liabilities.

In addition to the tax basis and at-risk limitations on the deductibility of losses, the passive loss limitations generally provide that individuals, estates, trusts and some closely-held corporations and personal service corporations can deduct losses from passive activities, which are generally trade or business activities in which the taxpayer does not materially participate, only to the extent of the taxpayer’s income from those passive activities. The passive loss limitations are applied separately with respect to each publicly traded partnership. Consequently, any passive losses MPLX generates will only be available to offset MPLX’s passive income generated in the future and will not be available to offset income from other passive activities or investments, including MPLX’s investments or any unitholder’s investments in other publicly traded partnerships, or the unitholder’s salary, active business or other income. Passive losses that are not deductible because they exceed any MPLX Unitholder’s share of income we generate may be deducted in full when he or she disposes of his or her entire investment in MPLX in a fully taxable transaction with an unrelated party. The passive loss limitations are applied after other applicable limitations on deductions, including the at-risk rules and the tax basis limitation.

An MPLX Unitholder’s share of MPLX’s net income may be offset by any of MPLX’s suspended passive losses, but it may not be offset by any other current or carryover losses from other passive activities, including those attributable to other publicly traded partnerships.

There is no guidance as to whether suspended passive activity losses of ANDX will be available to offset passive activity income that is allocated from MPLX after the Merger to a former ANDX Common Unitholder. The IRS may contend that since MPLX is not the same partnership as ANDX, the passive loss limitation rules would not allow a former ANDX Common Unitholder to utilize such losses until such time as all of the former ANDX Common Unitholder’s MPLX Common Units are sold. An MPLX Unitholder may take the position, however, that MPLX should be deemed a continuation of ANDX for this purpose such that any suspended ANDX losses would be available to offset MPLX taxable income allocated to such unitholder. Because of the lack of guidance with respect to this issue, Jones Day is unable to opine as to whether suspended passive activity losses arising from ANDX activities will be available to offset MPLX taxable income allocated to a former ANDX Common Unitholder following the Merger. If an ANDX Common Unitholder has losses with respect to ANDX Common Units, it is urged to consult its own tax advisor.

For taxpayers other than corporations in taxable years beginning after December 31, 2017, and before January 1, 2026, an “excess business loss” limitation further limits the deductibility of losses by such taxpayers. An excess business loss is the excess (if any) of a taxpayer’s aggregate deductions for the taxable year that are attributable to the trades or businesses of such taxpayer (determined without regard to the excess business loss limitation) over the aggregate gross income or gain of such taxpayer for the taxable year that is attributable to such trades or businesses plus a threshold amount. The threshold amount is equal to $250,000 or $500,000 for taxpayers filing a joint return. Disallowed excess business losses are treated as a net operating loss carryover to

 

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the following tax year. Any losses MPLX generates that are allocated to an MPLX Unitholder and not otherwise limited by the basis, at risk or passive loss limitations will be included in the determination of such MPLX Unitholder’s aggregate trade or business deductions. Consequently, any losses MPLX generates that are not otherwise limited will only be available to offset an MPLX Unitholder’s other trade or business income plus an amount of non-trade or business income equal to the applicable threshold amount. Thus, except to the extent of the threshold amount, MPLX’s losses that are not otherwise limited may not offset an MPLX Unitholder’s non-trade or business income (such as salaries, fees, interest, dividends and capital gains). This excess business loss limitation will be applied after the passive activity loss limitation.

Limitations on Interest Deductions

In general, MPLX is entitled to a deduction for interest paid or accrued on indebtedness properly allocable to MPLX’s trade or business during MPLX’s taxable year. However, MPLX’s deduction for this “business interest” is limited to the sum of MPLX’s business interest income and 30% of MPLX’s “adjusted taxable income.” For the purposes of this limitation, MPLX’s adjusted taxable income is computed without regard to any business interest or business interest income, without any deduction for depreciation, amortization or depletion (for taxable years beginning before January 1, 2022) without any adjustments for taxes. This limitation is first applied at the partnership level and any deduction for business interest is taken into account in determining MPLX’s non-separately stated taxable income or loss. Then, in applying this business interest limitation at the partner level, the adjusted taxable income of each of MPLX’s unitholders is determined without regard to such unitholder’s distributive share of any of MPLX’s items of income, gain, deduction or loss and is increased by such unitholder’s distributive share of MPLX’s excess taxable income, which is generally equal to the excess of 30% of MPLX’s adjusted taxable income over the amount of MPLX’s deduction for business interest for a taxable year.

To the extent MPLX’s deduction for business interest is not limited, we will allocate the full amount of MPLX’s deduction for business interest among MPLX’s unitholders in accordance with their percentage interests in MPLX. To the extent MPLX’s deduction for business interest is limited, the amount of any disallowed deduction for business interest will also be allocated to each unitholder in accordance with their percentage interest in us, but such amount of “excess business interest” will not be currently deductible. Subject to certain limitations and adjustments to a unitholder’s basis in its units, this excess business interest may be carried forward and deducted by a unitholder in a future taxable year.

In addition to this limitation on the deductibility of a partnership’s business interest, the deductibility of a non-corporate taxpayer’s “investment interest expense” is generally limited to the amount of that taxpayer’s “net investment income.” Investment interest expense includes:

 

   

interest on indebtedness properly allocable to property held for investment;

 

   

MPLX’s interest expense attributed to portfolio income; and

 

   

the portion of interest expense incurred to purchase or carry an interest in a passive activity to the extent attributable to portfolio income.

The computation of any MPLX Unitholder’s investment interest expense will take into account interest on any margin account borrowing or other loan incurred to purchase or carry a unit. Net investment income includes gross income from property held for investment and amounts treated as portfolio income under the passive loss rules, less deductible expenses, other than interest, directly connected with the production of investment income, but generally does not include gains attributable to the disposition of property held for investment or (if applicable) qualified dividend income. The IRS has indicated that the net passive income earned by a publicly traded partnership will be treated as investment income to its unitholders. In addition, the MPLX Unitholders’ share of MPLX’s portfolio income will be treated as investment income.

 

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Entity-Level Collections

If MPLX is required or elect under applicable law to pay any U.S. federal, state, local or foreign income tax on behalf of any unitholder or MPLX GP or any former MPLX Unitholder, MPLX is authorized to pay those taxes from MPLX’s funds. That payment, if made, will be treated as a distribution of cash to the unitholder on whose behalf the payment was made. If the payment is made on behalf of a person whose identity cannot be determined, MPLX is authorized to treat the payment as a distribution to all current unitholders. MPLX is authorized to amend the MPLX Partnership Agreement in the manner necessary to maintain uniformity of intrinsic tax characteristics of units and to adjust later distributions, so that after giving effect to these distributions, the priority and characterization of distributions otherwise applicable under the MPLX Partnership Agreement is maintained as nearly as is practicable. Payments by us as described above could give rise to an overpayment of tax on behalf of an individual unitholder in which event the unitholder would be required to file a claim in order to obtain a credit or refund.

Allocation of Income, Gain, Loss and Deduction

In general, if we have a net profit, MPLX’s items of income, gain, loss and deduction will be allocated among the MPLX Common Unitholders in accordance with their percentage interests in MPLX. If MPLX has a net loss, that loss will be allocated first to MPLX Common Unitholders in accordance with their percentage interests in us to the extent of their positive capital accounts, second to holders of MPLX Series A Preferred Units and the holders of MPLX Series B Preferred Units (the “MPLX Series B Preferred Unitholders”) in accordance with their percentage interests MPLX to the extent of their positive capital accounts and third to MPLX GP.

Specified items of MPLX’s income, gain, loss and deduction will be allocated to account for (i) any difference between the tax basis and fair market value of MPLX’s assets at the time of an offering and (ii) any difference between the tax basis and fair market value of any property contributed to MPLX by MPLX GP and its affiliates (or by a third party) that exists at the time of such contribution, together referred to in this discussion as the “Contributed Property.” The effect of these allocations, referred to as “Section 704(c) Allocations,” to any unitholder purchasing units in an offering of securities hereunder will be essentially the same as if the tax bases of MPLX’s assets were equal to their fair market values at the time of an offering of securities hereunder. In the event MPLX issues additional units or engage in certain other transactions in the future, “reverse Section 704(c) Allocations,” similar to the Section 704(c) Allocations described above, will be made to MPLX GP and all of MPLX’s Unitholders immediately prior to such issuance or other transactions to account for the difference between the “book” basis for purposes of maintaining capital accounts and the fair market value of all property held by us at the time of such issuance or future transaction. In addition, items of recapture income will be allocated to the extent possible to the unitholder who was allocated the deduction giving rise to the treatment of that gain as recapture income in order to minimize the recognition of ordinary income by some MPLX Unitholders. Finally, although MPLX does not expect that MPLX’s operations will result in the creation of negative adjusted capital accounts, if negative adjusted capital accounts nevertheless result, items of MPLX’s income and gain will be allocated in an amount and manner sufficient to eliminate the negative adjusted capital account balance as quickly as possible.

Former ANDX Common Unitholders that are deemed to receive MPLX Common Units in the Merger will receive the Section 704(c) Allocations that otherwise would have been allocated to ANDX pursuant to Section 704(c) of the Code had ANDX simply contributed its assets to MPLX in exchange for Common Units. Under these rules for example, following the Merger in the event that MPLX is deemed to divest itself of certain assets deemed formerly owned by ANDX (including through a distribution of such assets), all or a portion of any gain recognized as a result of a divestiture of such assets may be required to be allocated to the former ANDX Common Unitholders. In addition, a former ANDX Common Unitholder may also be required to recognize its share of ANDX’s remaining “built-in gain” upon certain distributions by MPLX to that MPLX Common Unitholder of other MPLX property (other than money) within seven years following the Merger. No special distributions will be made to the former ANDX Common Unitholders with respect to any tax liability from such transactions.

 

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An allocation of items of MPLX’s income, gain, loss or deduction, other than an allocation required by the Code to eliminate the difference between a partner’s “book” capital account, credited with the fair market value of Contributed Property, and “tax” capital account, credited with the tax basis of Contributed Property, referred to in this discussion as the “Book-Tax Disparity,” will generally be given effect for U.S. federal income tax purposes in determining a partner’s share of an item of income, gain, loss or deduction only if the allocation has “substantial economic effect.” In any other case, a partner’s share of an item will be determined on the basis of his or her interest in MPLX, which will be determined by taking into account all the facts and circumstances, including:

 

   

his or her relative contributions to MPLX;

 

   

the interests of all the partners in profits and losses;

 

   

the interest of all the partners in cash flow; and

 

   

the rights of all the partners to distributions of capital upon liquidation.

Jones Day is of the opinion that, with the exception of the issues described in the sections entitled “—Section 754 Election” and “—Disposition of Units—Allocations Between Transferors and Transferees,” allocations under the MPLX Partnership Agreement will be given effect for U.S. federal income tax purposes in determining a partner’s share of an item of income, gain, loss or deduction.

Treatment of Short Sales

An MPLX Unitholder whose units are loaned to a “short seller” to cover a short sale of units may be considered as having disposed of those units. If so, he or she would no longer be treated for tax purposes as a partner with respect to those units during the period of the loan and may recognize gain or loss from the disposition. As a result, during this period:

 

   

any of MPLX’s income, gain, loss or deduction with respect to those units would not be reportable by the MPLX Unitholder;

 

   

any cash distributions received by the MPLX Unitholder as to those units would be fully taxable; and

 

   

while not entirely free from doubt, all of these distributions would appear to be ordinary income.

Because there is no direct or indirect controlling authority on the issue relating to partnership interests, Jones Day has not rendered an opinion regarding the tax treatment of any MPLX Unitholder whose units are loaned to a short seller to cover a short sale of MPLX units; therefore, MPLX Unitholders desiring to assure their status as partners and avoid the risk of gain recognition from a loan to a short seller are urged to consult a tax advisor to discuss whether it is advisable to modify any applicable brokerage account agreements to prohibit their brokers from borrowing and loaning their units. The IRS has previously announced that it is studying issues relating to the tax treatment of short sales of partnership interests. Please also read the section entitled “—Disposition of Units—Recognition of Gain or Loss.”

Alternative Minimum Tax

Each noncorporate unitholder will be required to take into account his or her distributive share of any items of MPLX’s income, gain, loss or deduction for purposes of the alternative minimum tax. The current minimum tax rate for noncorporate married taxpayers filing jointly in 2019 is 26.0% on the first $194,800 of alternative minimum taxable income in excess of the exemption amount (which is phased out as a taxpayer’s income increases) and 28.0% on any additional alternative minimum taxable income. For taxable years beginning after December 31, 2017, and before January 1, 2026, the exemption amount and exemption amount phaseout thresholds for the alternative minimum tax are temporarily increased. Prospective MPLX Unitholders are urged to consult with their tax advisors as to the impact of an investment in units on their liability for the alternative minimum tax.

 

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Tax Rates

Under current law, the highest marginal U.S. federal income tax rate applicable to ordinary income of individuals is 37.0% and the highest marginal U.S. federal income tax rate applicable to long-term capital gains (generally, capital gains on certain assets held for more than 12 months) of individuals is 20.0%. Unless extended by legislation, the 37.0% rate applies only to taxable years beginning prior to December 31, 2025. Thereafter, the highest marginal U.S. federal income tax rate applicable to ordinary income of individuals is 39.6%. Such rates are subject to change by new legislation at any time.

An additional 3.8% Medicare tax is imposed on certain net investment income earned by individuals, estates and trusts. For these purposes, net investment income generally includes any unitholder’s allocable share of MPLX’s income and gain realized by any unitholder from a sale of units. In the case of an individual, the tax will be imposed on the lesser of (1) the unitholder’s net investment income and (2) the amount by which the unitholder’s modified adjusted gross income exceeds $250,000 (if the unitholder is married and filing jointly or a surviving spouse), $125,000 (if the unitholder is married and filing separately) or $200,000 (in any other case). In the case of an estate or trust, the tax will be imposed on the lesser of (1) undistributed net investment income and (2) the excess of adjusted gross income over the dollar amount at which the highest income tax bracket applicable to an estate or trust begins.

For taxable years beginning after December 31, 2017 and ending on or before December 31, 2025, an MPLX Common Unitholder is entitled to a deduction equal to 20.0% of his or her allocable share of MPLX’s “qualified business income.” For purposes of this deduction, MPLX’s “qualified business income” is equal to the sum of:

 

   

the net amount of MPLX’s U.S. items of income, gain, deduction and loss to the extent such items are included or allowed in the determination of taxable income for the year, excluding, however, certain specified types of passive investment income (such as capital gains and dividends, which are taxed at a rate of 20.0%); and

 

   

any gain recognized upon a disposition of MPLX Common Units to the extent such gain is attributable to Section 751 Assets, such as depreciation recapture and MPLX’s “inventory items,” and is thus treated as ordinary income under Section 751 of the Code.

Section 754 Election

We have made the election permitted by Section 754 of the Code. That election is irrevocable without the consent of the IRS unless there is a constructive termination of the partnership. Please read the section entitled “—Disposition of Units—Constructive Termination.” The election will generally permit us to adjust a common unit purchaser’s tax basis in MPLX’s assets, or “inside basis,” under Section 743(b) of the Code to reflect his or her purchase price. This election does not apply with respect to a person who purchases units directly from us. The Section 743(b) adjustment belongs to the purchaser and not to other unitholders. For purposes of this discussion, the inside basis in MPLX’s assets with respect to any unitholder will be considered to have two components: (i) his or her share of MPLX’s tax basis in MPLX’s assets, or “common basis,” and (ii) his or her Section 743(b) adjustment to that basis.

MPLX has adopted the remedial allocation method as to all MPLX properties. Where the remedial allocation method is adopted, the Treasury Regulations under Section 743 of the Code require a portion of the Section 743(b) adjustment that is attributable to recovery property that is subject to depreciation under Section 168 of the Code and whose book basis is in excess of its tax basis to be depreciated over the remaining cost recovery period for the property’s unamortized Book-Tax Disparity. Under Treasury Regulation Section 1.167(c)-1(a)(6), a Section 743(b) adjustment attributable to property subject to depreciation under Section 167 of the Code, rather than cost recovery deductions under Section 168, is generally required to be depreciated using either the straight-line method or the 150.0% declining balance method. Under the MPLX

 

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Partnership Agreement, MPLX GP is authorized to take a position to preserve the uniformity of MPLX Common Units even if that position is not consistent with these and any other Treasury Regulations. Please read the section entitled “—Disposition of Units—Uniformity of Units.”

MPLX is depreciating the portion of a Section 743(b) adjustment attributable to unrealized appreciation in the value of Contributed Property, to the extent of any unamortized Book-Tax Disparity, using a rate of depreciation or amortization derived from the depreciation or amortization method and useful life applied to the property’s unamortized Book-Tax Disparity, or treating that portion as non-amortizable to the extent attributable to property which is not amortizable. This method is consistent with the methods employed by other publicly traded partnerships but is arguably inconsistent with Treasury Regulation Section 1.167(c)-1(a)(6), which does not directly apply to a material portion of MPLX’s assets. To the extent that this Section 743(b) adjustment is attributable to appreciation in value in excess of the unamortized Book-Tax Disparity, we have applied (and expect to continue to apply) the rules described in the Treasury Regulations and legislative history. If MPLX determines that this position cannot reasonably be taken, MPLX may take a depreciation or amortization position under which all purchasers acquiring units in the same month would receive depreciation or amortization, whether attributable to common basis or a Section 743(b) adjustment, based upon the same applicable rate as if they had purchased a direct interest in MPLX’s assets. This kind of aggregate approach may result in lower annual depreciation or amortization deductions than would otherwise be allowable to some unitholders. Please read the section entitled “—Disposition of Units—Uniformity of Units.” Any MPLX Unitholder’s tax basis for his or her common units is reduced by his share of MPLX’s deductions (whether or not such deductions were claimed on an individual’s income tax return) so that any position MPLX takes that understates deductions will overstate the unitholder’s tax basis in his or her common units, which may cause the unitholder to understate gain or overstate loss on any sale of such units. Please read the section entitled “—Disposition of Units—Recognition of Gain or Loss.” Jones Day is unable to opine as to whether MPLX’s method for taking into account Section 743 adjustments is sustainable for property subject to depreciation under Section 167 of the Code or if MPLX uses an aggregate approach as described above, as there is no direct or indirect controlling authority addressing the validity of these positions. Moreover, the IRS may challenge MPLX’s position with respect to depreciating or amortizing the Section 743(b) adjustment MPLX takes to preserve the uniformity of the units. If such a challenge were sustained, the gain from the sale of units might be increased without the benefit of additional deductions.

A Section 754 election is advantageous if the transferee’s tax basis in his or her units is higher than the units’ share of the aggregate tax basis of MPLX’s assets immediately prior to the transfer. In that case, as a result of the election, the transferee would have, among other items, a greater amount of depreciation deductions and his or her share of any gain or loss on a sale of MPLX’s assets would be less. Conversely, a Section 754 election is disadvantageous if the transferee’s tax basis in his or her units is lower than those units’ share of the aggregate tax basis of MPLX’s assets immediately prior to the transfer. Thus, the fair market value of the units may be affected either favorably or unfavorably by the election. A tax basis adjustment is required regardless of whether a Section 754 election is made in the case of a transfer of an interest in us if we have a substantial built-in loss immediately after the transfer, or if MPLX distributes property and have a substantial tax basis reduction. Generally, a built-in loss or a tax basis reduction is substantial if it exceeds $250,000.

The calculations involved in the Section 754 election are complex and are made on the basis of assumptions as to the value of MPLX’s assets and other matters. For example, the allocation of the Section 743(b) adjustment among MPLX’s assets must be made in accordance with the Code. The IRS could seek to reallocate some or all of any Section 743(b) adjustment allocated by us to MPLX’s tangible assets to goodwill instead. Goodwill, as an intangible asset, is generally nonamortizable or amortizable over a longer period of time or under a less accelerated method than MPLX’s tangible assets. MPLX cannot assure you that the determinations MPLX makes will not be successfully challenged by the IRS and that the deductions resulting from them will not be reduced or disallowed altogether. Should the IRS require a different tax basis adjustment to be made, and should, in MPLX’s opinion, the expense of compliance exceed the benefit of the election, MPLX may seek permission

 

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from the IRS to revoke MPLX’s Section 754 election. If permission is granted, a subsequent purchaser of units may be allocated more income than he or she would have been allocated had the election not been revoked.

Tax Treatment of Operations

Accounting Method and Taxable Year

MPLX uses the year ending December 31 as MPLX’s taxable year and the accrual method of accounting for U.S. federal income tax purposes. Each unitholder will be required to include in income his or her share of MPLX’s income, gain, loss and deduction for MPLX’s taxable year ending within or with his or her taxable year. In addition, any unitholder who has a taxable year ending on a date other than December 31 and who disposes of all of his or her units following the close of MPLX’s taxable year but before the close of his or her taxable year must include his or her share of MPLX’s income, gain, loss and deduction in income for his or her taxable year, with the result that he or she will be required to include in income for his or her taxable year his or her share of more than 12 months of MPLX’s income, gain, loss and deduction. Please read the section entitled “—Disposition of Units—Allocations Between Transferors and Transferees.”

Initial Tax Basis, Depreciation and Amortization

The tax basis of MPLX’s assets will be used for purposes of computing depreciation and cost recovery deductions and, ultimately, gain or loss on the disposition of these assets. The U.S. federal income tax burden associated with the difference between the fair market value of MPLX’s assets and their tax basis immediately prior to an offering of securities hereunder will be borne by MPLX GP and all of MPLX’s unitholders as of that time. Please read the section entitled “—Tax Consequences of Unit Ownership—Allocation of Income, Gain, Loss and Deduction.”

To the extent allowable, MPLX may elect to use the depreciation and cost recovery methods, including bonus depreciation to the extent available, that will result in the largest deductions being taken in the early years after assets subject to these allowances are placed in service. Please read the section entitled “—Disposition of Units—Uniformity of Units.” Property MPLX subsequently acquires or constructs may be depreciated using accelerated methods permitted by the Code.

If MPLX disposes of depreciable property by sale, foreclosure or otherwise, all or a portion of any gain, determined by reference to the amount of depreciation previously deducted and the nature of the property, may be subject to the recapture rules and taxed as ordinary income rather than capital gain. Similarly, any unitholder who has taken cost recovery or depreciation deductions with respect to property MPLX owns will likely be required to recapture some or all of those deductions as ordinary income upon a sale of his or her interest in us. Please read the sections entitled “—Tax Consequences of Unit Ownership—Allocation of Income, Gain, Loss and Deduction” and “—Disposition of Units—Recognition of Gain or Loss.”

The costs MPLX incurs in selling MPLX’s units, called “syndication expenses,” must be capitalized and cannot be deducted currently, ratably or upon MPLX’s termination. There are uncertainties regarding the classification of costs as organization expenses, which may be amortized by us, and as syndication expenses, which may not be amortized by us. The underwriting discounts and commissions MPLX incurs will be treated as syndication expenses.

Valuation and Tax Basis of MPLX’s Properties

The U.S. federal income tax consequences of the ownership and disposition of units will depend in part on MPLX’s estimates of the relative fair market values, and the initial tax bases, of MPLX’s assets. Although MPLX may from time to time consult with professional appraisers regarding valuation matters, MPLX will make many of the relative fair market value estimates itself. These estimates and determinations of tax basis are subject

 

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to challenge and will not be binding on the IRS or the courts. If the estimates of fair market value or determinations of tax basis are later found to be incorrect, the character and amount of items of income, gain, loss or deductions previously reported by unitholders might change, and unitholders might be required to adjust their tax liability for prior years and incur interest and penalties with respect to those adjustments.

Disposition of Units

Recognition of Gain or Loss

Gain or loss will be recognized on a sale of units equal to the difference between the amount realized and the unitholder’s tax basis for the units sold. Any unitholder’s amount realized will be measured by the sum of the cash or the fair market value of other property received by him or her plus his or her share of MPLX’s nonrecourse liabilities. Because the amount realized includes any MPLX Unitholder’s share of MPLX’s nonrecourse liabilities, the gain recognized on the sale of units could result in a tax liability in excess of any cash received from the sale.

Prior distributions from us that in the aggregate were in excess of cumulative net taxable income attributable to a unit and, therefore, decreased any unitholder’s tax basis in that unit will, in effect, become taxable income if the common unit is sold at a price greater than the unitholder’s tax basis in that unit, even if the price received is less than his or her original cost.

Except as noted below, gain or loss recognized by any MPLX Unitholder, other than a “dealer” in units, on the sale or exchange of a unit will generally be taxable as capital gain or loss. Capital gain recognized by an individual on the sale of units with a holding period of more than 12 months (the determination of such holding period is discussed in the section entitled “Material U.S. Federal Income Tax Consequences of the Merger—Tax Basis and Holding Period of the MPLX Units Received”) will generally be taxed at the U.S. federal income tax rate applicable to long-term capital gains. However, a portion of this gain or loss, which will likely be substantial, will be separately computed and taxed as ordinary income or loss under Section 751 of the Code to the extent attributable to Section 751 Assets that MPLX owns. The term “unrealized receivables” includes potential recapture items, including depreciation recapture. Ordinary income attributable to unrealized receivables, inventory items and depreciation recapture may exceed net taxable gain realized upon the sale of a unit and may be recognized even if there is a net taxable loss realized on the sale of a unit. Thus, any unitholder may recognize both ordinary income and a capital loss upon a sale of units. Capital losses may offset capital gains and no more than $3,000 of ordinary income, in the case of individuals, and may only be used to offset capital gains in the case of corporations.

The IRS has ruled that a partner who acquires interests in a partnership in separate transactions must combine those interests and maintain a single adjusted tax basis for all those interests. Upon a sale or other disposition of less than all of those interests, a portion of that tax basis must be allocated to the interests sold using an “equitable apportionment” method, which generally means that the tax basis allocated to the interest sold equals an amount that bears the same relation to the partner’s tax basis in his or her entire interest in the partnership as the value of the interest sold bears to the value of the partner’s entire interest in the partnership. Treasury Regulations under Section 1223 of the Code allow a selling MPLX Common Unitholder who can identify MPLX Common Units transferred with an ascertainable holding period to elect to use the actual holding period of the MPLX Common Units transferred. Thus, according to the ruling discussed above, any MPLX Common Unitholder will be unable to select high or low tax basis MPLX Common Units to sell as would be the case with corporate stock, but, according to the Treasury Regulations, he or she may designate specific common units sold for purposes of determining the holding period of units transferred. Any unitholder electing to use the actual holding period of MPLX Common Units transferred must consistently use that identification method for all subsequent sales or exchanges of MPLX Common Units. Any MPLX Common Unitholder considering the purchase of additional units or a sale of MPLX Common Units purchased in separate transactions is urged to consult his or her tax advisor as to the possible consequences of this ruling and application of the Treasury Regulations.

 

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Specific provisions of the Code affect the taxation of some financial products and securities, including partnership interests, by treating a taxpayer as having sold an “appreciated” partnership interest, one in which gain would be recognized if it were sold, assigned or terminated at its fair market value, if the taxpayer or related persons enter(s) into:

 

   

a short sale;

 

   

an offsetting notional principal contract; or

 

   

a futures or forward contract;

in each case, with respect to the partnership interest or substantially identical property.

Moreover, if a taxpayer has previously entered into a short sale, an offsetting notional principal contract or a futures or forward contract with respect to the partnership interest, the taxpayer will be treated as having sold that position if the taxpayer or a related person then acquires the partnership interest or substantially identical property. The Secretary of the Treasury is also authorized to issue regulations that treat a taxpayer that enters into transactions or positions that have substantially the same effect as the preceding transactions as having constructively sold the financial position.

Allocations Between Transferors and Transferees

In general, MPLX’s taxable income and losses will be determined for each taxable period, will be prorated on a monthly basis and will be subsequently apportioned among MPLX’s Unitholders in proportion to the number of units owned by each of them as of the opening of the applicable exchange on the first business day of the month, which MPLX refers to in this prospectus as the “Allocation Date.” However, gain or loss realized on a sale or other disposition of MPLX’s assets other than in the ordinary course of business will be allocated among MPLX’s Unitholders on the Allocation Date in the month in which that gain or loss is recognized. As a result, any MPLX Unitholder transferring units may be allocated income, gain, loss and deduction realized after the date of transfer.

The U.S. Department of the Treasury and the IRS have issued Treasury Regulations that permit publicly traded partnerships to use a monthly simplifying convention that is similar to ours, but they do not specifically authorize all aspects of the proration method MPLX has adopted. Accordingly, Jones Day is unable to opine on the validity of this method of allocating income and deductions between transferor and transferee unitholders. If MPLX’s method were found to be inappropriate by the IRS or a court of law, MPLX’s taxable income or losses might be reallocated among the unitholders.

MPLX is authorized to revise MPLX’s method of allocation between transferor and transferee unitholders, as well as unitholders whose interests vary during a taxable year. We do not currently plan to change MPLX’s method of allocation.

Any MPLX Unitholder who owns units at any time during a quarter and who disposes of them prior to the record date set for a cash distribution for that quarter will be allocated items of MPLX’s income, gain, loss and deductions attributable to that quarter but will not be entitled to receive that cash distribution.

Notification Requirements

Any MPLX Common Unitholder who sells any of his or her MPLX Common Units is generally required to notify MPLX in writing of that sale within 30 days after the sale (or, if earlier, January 15 of the year following the sale). A purchaser of MPLX Common Units who purchases MPLX Common Units from another MPLX Common Unitholder is also generally required to notify us in writing of that purchase within 30 days after the purchase. Upon receiving such notifications, we are required to notify the IRS of that transaction and to furnish

 

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specified information to the transferor and transferee. Failure to notify us of a purchase may, in some cases, lead to the imposition of penalties. However, these reporting requirements do not apply to a sale by an individual who is a citizen of the U.S. and who effects the sale or exchange through a broker who will satisfy such requirements.

Uniformity of MPLX Common Units

Because MPLX cannot match transferors and transferees of MPLX Common Units, MPLX must maintain uniformity of the economic and tax characteristics of the MPLX Common Units to a purchaser of these units. In the absence of uniformity, MPLX may be unable to completely comply with a number of U.S. federal income tax requirements, both statutory and regulatory. A lack of uniformity can result from a literal application of Treasury Regulation Section 1.167(c)-1(a)(6). Any non-uniformity could have a negative impact on the value of the MPLX Common Units. Please read the section entitled “—Section 754 Election.” MPLX intends to depreciate the portion of a Section 743(b) adjustment attributable to unrealized appreciation in the value of Contributed Property, to the extent of any unamortized Book-Tax Disparity, using a rate of depreciation or amortization derived from the depreciation or amortization method and useful life applied to the property’s unamortized Book-Tax Disparity, or treat that portion as nonamortizable, to the extent attributable to property the common basis of which is not amortizable, consistent with the regulations under Section 743 of the Code, even though that position may be inconsistent with Treasury Regulation Section 1.167(c)-1(a)(6), which is not expected to directly apply to a material portion of MPLX’s assets.

Please read the section entitled “—Section 754 Election.” To the extent that the Section 743(b) adjustment is attributable to appreciation in value in excess of the unamortized Book-Tax Disparity, MPLX will apply the rules described in the Treasury Regulations and legislative history. If we determine that this position cannot reasonably be taken, we may adopt a depreciation and amortization position under which all purchasers acquiring MPLX Common Units in the same month would receive depreciation and amortization deductions, whether attributable to common basis or a Section 743(b) adjustment, based upon the same applicable rate as if they had purchased a direct interest in MPLX’s assets. If this position is adopted, it may result in lower annual depreciation and amortization deductions than would otherwise be allowable to some unitholders and risk the loss of depreciation and amortization deductions not taken in the year that these deductions are otherwise allowable. This position will not be adopted if MPLX determines that the loss of depreciation and amortization deductions will have a material adverse effect on the unitholders. If MPLX chooses not to utilize this aggregate method, MPLX may use any other reasonable depreciation and amortization method to preserve the uniformity of the intrinsic tax characteristics of any MPLX Common Units that would not have a material adverse effect on the MPLX Common Unitholders. In either case, and as stated above under the section entitled “—Section 754 Election,” Jones Day has not rendered an opinion with respect to these methods. Moreover, the IRS may challenge any method of depreciating the Section 743(b) adjustment described in this paragraph. If this challenge were sustained, the uniformity of units might be affected, and the gain from the sale of units might be increased without the benefit of additional deductions. Please read the section entitled “—Disposition of Units—Recognition of Gain or Loss.”

Tax-Exempt Organizations and Other Investors

Ownership of units by employee benefit plans, other tax-exempt organizations, non-resident aliens, foreign corporations and other foreign persons raises issues unique to those investors and, as described below to a limited extent, may have substantially adverse tax consequences to them. If you are a tax-exempt entity or a non-U.S. person, you should consult your tax advisor before investing in MPLX Common Units. Employee benefit plans and most other organizations exempt from U.S. federal income tax, including individual retirement accounts and other retirement plans, are subject to U.S. federal income tax on unrelated business taxable income. Virtually all of MPLX’s income allocated to any MPLX Common Unitholder that is a tax-exempt organization will be unrelated business taxable income and will be taxable to it. The treatment of guaranteed payments for the use of capital on the MPLX Series B Preferred Units to tax-exempt investors is not certain because there is no direct controlling authority on such treatment, and such payments may be treated as UBTI for U.S. federal income tax purposes. Jones Day is unable to opine with respect to whether such payments constitute UBTI for U.S. federal

 

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income tax purposes. If you are a tax-exempt entity, you should consult your tax advisor with respect to the consequences of owning the MPLX Series B Preferred Units.

Non-resident aliens and foreign corporations, trusts or estates that own MPLX Common Units will be considered to be engaged in business in the U.S. because of the ownership of MPLX Common Units. As a consequence, they will be required to file U.S. federal income tax returns to report their share of MPLX’s income, gain, loss or deduction and pay U.S. federal income tax at regular rates on their share of MPLX’s net income or gain. Moreover, under rules applicable to publicly traded partnerships, MPLX’s quarterly distribution to foreign unitholders will be subject to withholding at the highest applicable effective tax rate. Each foreign unitholder must obtain a taxpayer identification number from the IRS and submit that number to MPLX’s transfer agent on a Form W-8BEN, Form W-8BEN-E or applicable substitute form in order to obtain credit for these withholding taxes. A change in applicable law may require MPLX to change these procedures. While the tax treatment of guaranteed payments for the use of capital on the MPLX Series B Preferred Units to foreign unitholders is not certain, the distributions may be treated as effectively connected income. Consequently, a foreign MPLX Series B Preferred Unitholder would generally be required to file U.S. federal income tax returns and pay U.S. federal income tax on such amounts in the same manner as a foreign MPLX Common Unitholder.

In addition, because a foreign corporation that owns units will be treated as engaged in a U.S. trade or business, that corporation may be subject to the U.S. branch profits tax at a rate of 30.0%, in addition to regular U.S. federal income tax, on its share of MPLX’s earnings and profits, as adjusted for changes in the foreign corporation’s “U.S. net equity” (as defined in Section 884(c) of the Code), that is effectively connected with the conduct of a U.S. trade or business. That tax may be reduced or eliminated by an income tax treaty between the U.S. and the country in which the foreign corporate unitholder is a “qualified resident.” In addition, this type of unitholder is subject to special information reporting requirements under Section 6038C of the Code.

A foreign unitholder who sells or otherwise disposes of an MPLX Common Unit will be subject to U.S. federal income tax on gain realized from the sale or disposition of that unit to the extent that the gain is effectively connected with a U.S. trade or business of the foreign unitholder. While a 2017 decision by the United States Tax Court held that gain from the sale of a partnership interest is not, solely as a result of the U.S. trade or business activities of the partnership, treated as effectively connected with a U.S. trade or business of a non-U.S. partner, legislation effectively overturns this decision for dispositions occurring after November 27, 2017. The law also imposes a 10% withholding tax on the amount realized on the disposition of a partnership interest by a foreign partner. Although the amount realized on the sale of disposition of an MPLX Common Unit includes the partner’s share of partnership liabilities, the IRS has issued proposed regulations that would treat the total cash purchase price for MPLX Common Units as the amount realized for purposes of this 10% withholding tax. Such withholding tax obligation is currently suspended in the case of a disposition of certain publicly traded partnership interests until 60 days after the proposed regulations are finalized. Moreover, under the Foreign Investment in Real Property Tax Act, a foreign unitholder generally will be subject to U.S. federal income tax upon the sale or disposition of a common unit if (i) he or she owned (directly or constructively applying certain attribution rules) more than 5.0% of our common units at any time during the five-year period ending on the date of such disposition and (ii) 50.0% or more of the fair market value of all of our assets consisted of U.S. real property interests at any time during the shorter of the period during which such unitholder held the units or the five-year period ending on the date of disposition. Currently, more than 50.0% of MPLX’s assets consist of U.S. real property interests and MPLX does not expect that to change in the foreseeable future. Therefore, foreign unitholders may be subject to U.S. federal income tax on gain from the sale or disposition of their units.

Administrative Matters

Information Returns and Audit Procedures

MPLX intends to furnish to each unitholder, within 90 days after the close of each calendar year, specific tax information, including a Schedule K-1, which describes his or her share of MPLX’s income, gain, loss and

 

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deduction for preceding taxable year. In preparing this information, which will not be reviewed by counsel, we will take various accounting and reporting positions, some of which have been mentioned earlier, to determine each unitholder’s share of income, gain, loss and deduction. MPLX cannot assure you that those positions will yield a result that conforms to the requirements of the Code, Treasury Regulations or administrative interpretations of the IRS. Neither MPLX nor Jones Day can assure prospective unitholders that the IRS will not successfully contend in court that those positions are impermissible. Any challenge by the IRS could negatively affect the value of the units.

The IRS may audit MPLX’s U.S. federal income tax returns. Adjustments resulting from an IRS audit may require each unitholder to adjust a prior year’s tax liability, and possibly may result in an audit of his or her U.S. federal income tax return. Any audit of any unitholder’s U.S. federal income tax return could result in adjustments not related to MPLX’s federal income tax returns in addition to those related to MPLX’s U.S. federal income tax returns.

Partnerships generally are treated as separate entities for purposes of U.S. federal tax audits, judicial review of administrative adjustments by the IRS and tax settlement proceedings. The tax treatment of partnership items of income, gain, loss and deduction are determined in a partnership proceeding rather than in separate proceedings with the partners. For taxable years beginning prior to January 1, 2018, the Code requires that one partner be designated as the “Tax Matters Partner” for these purposes. The MPLX Partnership Agreement names MPLX GP as the Tax Matters Partner.

The Tax Matters Partner has made and will make some elections on MPLX’s behalf and on behalf of MPLX Unitholders. In addition, the Tax Matters Partner can extend the statute of limitations for assessment of tax deficiencies against MPLX Unitholders for items in MPLX’s U.S. federal income tax returns. The Tax Matters Partner may bind any MPLX Unitholder with less than a 1.0% profits interest in MPLX to a settlement with the IRS unless that MPLX Unitholder elects, by filing a statement with the IRS, not to give that authority to the Tax Matters Partner. The Tax Matters Partner may seek judicial review, by which all the MPLX Unitholders are bound, of a final partnership administrative adjustment and, if the Tax Matters Partner fails to seek judicial review, judicial review may be sought by any unitholder having at least a 1.0% interest in profits or by any group of MPLX Unitholder having in the aggregate at least a 5.0% interest in profits. However, only one action for judicial review will go forward, and each MPLX Unitholder with an interest in the outcome may participate. The Tax Matters Partner may select the forum for judicial review, and if the Tax Matters Partner selects the Court of Federal Claims or a District Court, rather than the Tax Court, partners may be required to pay any deficiency asserted by the IRS before judicial review is available.

Any MPLX Unitholder must file a statement with the IRS identifying the treatment of any item on his or her U.S. federal income tax return that is not consistent with the treatment of the item on MPLX’s U.S. federal income tax return. Intentional or negligent disregard of this consistency requirement may subject any MPLX Unitholder to substantial penalties.

For taxable years beginning after December 31, 2017, the above set of rules no longer apply to U.S. federal income tax audits of MPLX and other partners. Under the new rules, there no longer is a Tax Matters Partner, but rather a partner or other person with a substantial presence in the United States is designated as the partnership representative (“Partnership Representative”). The Partnership Representative has the sole authority to act on MPLX’s behalf for purposes of, among other things, U.S. federal income tax audits and judicial review of administrative adjustments by the IRS. Actions taken by us or by the Partnership Representative on MPLX’s behalf with respect to such matters will be binding on us and all of MPLX’s unitholders. MPLX GP has been designated as the Partnership Representative. Some details of these rules are not yet clear. Each prospective MPLX Unitholder should consult his or her own tax advisor regarding this new system for partnership audits.

In addition, if the IRS makes audit adjustments to MPLX’s income tax returns for tax years beginning after December 31, 2017, the IRS may collect any resulting taxes (including any applicable penalties and interest)

 

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directly from us. MPLX will generally have certain limited rights to shift any such tax liability to MPLX GP and MPLX’s unitholders in accordance with their interests in us during the year under audit, but there can be no assurance that we will be able to do so (or choose to do so) under all circumstances. If MPLX is required to make payments of taxes, penalties and interest resulting from audit adjustments, MPLX’s cash available for distribution to MPLX GP and MPLX’s unitholders might be substantially reduced.

Additional Withholding Requirements

Additional withholding taxes may apply to certain types of payments made to “foreign financial institutions” (as specially defined in the Code) and certain other non-U.S. entities. Specifically, a 30% withholding tax may be imposed on interest, dividends and other fixed or determinable annual or periodical gains, profits and income from sources within the United States, which MPLX refers to as “FDAP Income,” or gross proceeds from the sale or other disposition of any property of a type which can produce interest or dividends from sources within the United States paid to a foreign financial institution or to a non-financial foreign entity, unless (i) the foreign financial institution undertakes certain diligence and reporting, (ii) the non-financial foreign entity either certifies it does not have any substantial U.S. owners or furnishes identifying information regarding each substantial U.S. owner or (iii) the foreign financial institution or non-financial foreign entity otherwise qualifies for an exemption from these rules. If the payee is a foreign financial institution and is subject to the diligence and reporting requirements in clause (i) above, it must enter into an agreement with the U.S. Treasury requiring, among other things, that it undertake to identify accounts held by certain U.S. persons or U.S.-owned foreign entities, annually report certain information about such accounts, and withhold 30% on payments to noncompliant foreign financial institutions and certain other account holders.

The withholding provisions described above generally apply to all payments of FDAP Income and to payments of relevant gross proceeds. The IRS issued proposed Treasury Regulations that would eliminate the application of this regime with respect to payments of gross proceeds (but not payments of FDAP Income). Pursuant to these proposed Treasury Regulations, MPLX or any other applicable withholding agent may (but are not required to) rely on this proposed change until final regulations are issued or until such proposed regulations are rescinded. Each ANDX Unitholder should consult his or her own tax advisor regarding the applicability of these withholding provisions to an investment in MPLX units.

Nominee Reporting

Persons who hold an interest in us as a nominee for another person are required to furnish to us:

 

   

the name, address and taxpayer identification number of the beneficial owner and the nominee;

 

   

information about whether the beneficial owner is:

 

   

a person that is not a U.S. person;

 

   

a foreign government, an international organization or any wholly owned agency or instrumentality of either of the foregoing; or

 

   

a tax-exempt entity;

 

   

the amount and description of units held, acquired or transferred for the beneficial owner; and

 

   

specific information including the dates of acquisitions and transfers, means of acquisitions and transfers, and acquisition cost for purchases, as well as the amount of net proceeds from dispositions.

Brokers and financial institutions are required to furnish additional information, including whether they are U.S. persons and specific information on units they acquire, hold or transfer for their own account. A penalty per failure, with a significant maximum penalty per calendar year, is imposed by the Code for failure to report that information to us. The nominee is required to supply the beneficial owner of the units with the information furnished to us.

 

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Accuracy-Related Penalties

A penalty equal to 20.0% of the amount of any portion of an underpayment of tax that is attributable to one or more specified causes, including negligence or disregard of rules or regulations, substantial understatements of income tax and substantial valuation misstatements, is imposed by the Code. No penalty will be imposed, however, for any portion of an underpayment if it is shown that there was a reasonable cause for that portion and that the taxpayer acted in good faith regarding that portion.

For individuals, a substantial understatement of income tax in any taxable year generally exists if the amount of the understatement exceeds the greater of 10.0% of the tax required to be shown on the U.S. federal income tax return for the taxable year or $5,000 ($10,000 for most corporations). The amount of any understatement subject to penalty generally is reduced if any portion is attributable to a position adopted on the tax return:

 

   

for which there is, or was, “substantial authority”; or

 

   

as to which there is a reasonable basis and the pertinent facts of that position are disclosed on the tax return.

If any item of income, gain, loss or deduction included in the distributive shares of unitholders might result in that kind of an “understatement” of income for which no “substantial authority” exists, MPLX must disclose the pertinent facts on MPLX’s U.S. federal income tax return. In addition, MPLX will make a reasonable effort to furnish sufficient information for unitholders to make adequate disclosure on their U.S. federal income tax returns and to take other actions as may be appropriate to permit unitholders to avoid liability for this penalty. More stringent rules apply to “tax shelters,” which MPLX does not believe includes us, or any of MPLX’s investments, plans or arrangements.

A substantial valuation misstatement exists if (a) the value of any property, or the adjusted tax basis of any property, claimed on a tax return is 150.0% or more of the amount determined to be the correct amount of the valuation or adjusted tax basis, (b) the price for any property or services (or for the use of property) claimed on any such tax return with respect to any transaction between persons described in Code Section 482 is 200.0% or more (or 50.0% or less) of the amount determined under Section 482 to be the correct amount of such price, or (c) the net Code Section 482 transfer price adjustment for the taxable year exceeds the lesser of $5 million or 10.0% of the taxpayer’s gross receipts. No penalty is imposed unless the portion of the underpayment attributable to a substantial valuation misstatement exceeds $5,000 ($10,000 for most corporations). If the valuation claimed on a tax return is 200.0% or more than the correct valuation or certain other thresholds are met, the penalty imposed increases to 40.0%. MPLX does not anticipate making any valuation misstatements.

In addition, the 20.0% accuracy-related penalty also applies to any portion of an underpayment of tax that is attributable to transactions lacking economic substance. To the extent that such transactions are not disclosed, the penalty imposed is increased to 40.0%. Additionally, there is no reasonable cause defense to the imposition of this penalty to such transactions.

Reportable Transactions

If MPLX was to engage in a “reportable transaction,” MPLX (and possibly you and others) would be required to make a detailed disclosure of the transaction to the IRS. A transaction may be a reportable transaction based upon any of several factors, including the fact that it is a type of tax avoidance transaction publicly identified by the IRS as a “listed transaction” or that it produces certain kinds of losses for partnerships, individuals, S corporations, and trusts above certain thresholds (generally in excess of $2.0 million in any single year, or $4.0 million in a combination of years). MPLX’s participation in a reportable transaction could increase the likelihood that MPLX’s federal income tax information return (and possibly your tax return) would be audited by the IRS. Please read the section entitled “—Administrative Matters—Information Returns and Audit Procedures.”

 

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Moreover, if MPLX was to participate in a reportable transaction with a significant purpose to avoid or evade tax, or in any listed transaction, you may be subject to the following additional consequences:

 

   

accuracy-related penalties with a broader scope, significantly narrower exceptions, and potentially greater amounts than described above at the section entitled “—Administrative Matters—Accuracy-Related Penalties”;

 

   

for those persons otherwise entitled to deduct interest on U.S. federal tax deficiencies, nondeductibility of interest on any resulting tax liability; and

 

   

in the case of a listed transaction, an extended statute of limitations.

MPLX does not expect to engage in any “reportable transactions.”

Legislative Developments

The present U.S. federal income tax treatment of publicly traded partnerships, including us, or an investment in MPLX Common Units may be modified by administrative, legislative or judicial interpretation at any time. For example, from time to time, members of Congress propose and consider substantive changes to the existing U.S. federal income tax laws that affect publicly traded partnerships. Any modification to the U.S. federal income tax laws and interpretations thereof may or may not be retroactively applied, and could make it more difficult or impossible to meet the exception for us to be treated as a partnership for U.S. federal income tax purposes. Please read the section entitled “—Partnership Status.” MPLX does unable to predict whether any such changes will ultimately be enacted by Congress or promulgated by the IRS and the U.S. Department of the Treasury. However, it is possible that a change in law could affect us and may be applied retroactively. Any such changes could negatively impact the value of an investment in MPLX’s units.

 

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STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES

In addition to U.S. federal income taxes, you likely will be subject to other taxes, such as state, local and foreign income taxes, unincorporated business taxes, and estate, inheritance or intangible taxes that may be imposed by the various jurisdictions in which MPLX does business or own property or in which you are a resident. Although an analysis of those various taxes is not presented here, each prospective common unitholder should consider their potential impact on his or her investment in MPLX. MPLX currently conducts and/or is registered to transact business in more than 30 states. Many of these states currently impose an income tax on corporations and other entities. Many of these states also impose a personal income tax on individuals. MPLX may also own property or do business in other jurisdictions in the future. Although you may not be required to file an income tax return and pay income taxes in some jurisdictions because your income from that jurisdiction falls below the applicable threshold to trigger a filing and payment requirement, you will be required to file income tax returns and to pay income taxes in many of these jurisdictions in which MPLX does business or own property and may be subject to penalties for failure to comply with those requirements. In some jurisdictions, tax losses may not produce a tax benefit in the year incurred and may not be available to offset income in subsequent taxable years. Some of the jurisdictions may require us, or MPLX may elect, to withhold an amount equal to a percentage of income from amounts distributed to a common unitholder who is not a resident of the jurisdiction. MPLX’s withholding, whether in an amount which is greater or less than a particular common unitholder’s income tax liability to the jurisdiction, generally does not relieve a nonresident common unitholder from the obligation to file an income tax return in such jurisdiction. Amounts withheld will be treated as if distributed to common unitholders for purposes of determining the amounts distributed by us. Please read the section entitled “—Entity-Level Collections.” Based on current law and MPLX’s estimate of MPLX’s future operations, MPLX GP anticipates that any amounts required to be withheld will not be material.

It is the responsibility of each MPLX Unitholder to investigate the legal and tax consequences, under the laws of pertinent states, localities and foreign jurisdictions, of his or her investment in MPLX. Accordingly, each ANDX Unitholder is urged to consult his or her own tax counsel or other advisor with regard to those matters. Further, it is the responsibility of each MPLX unitholder to file all state, local and foreign, as well as U.S. federal income tax returns, that may be required of him or her. Jones Day has not rendered an opinion on the state, local or foreign tax consequences of an investment in MPLX.

 

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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

Pro Forma Financial Information

On May 7, 2019, pursuant to the Merger Agreement, MPLX agreed to acquire all of the outstanding ANDX Common Units in a unit-for-unit transaction at a blended exchange ratio of 1.07x. The Public Unitholder Exchange Ratio will be 1.135 MPLX Common Units for each ANDX Common Unit held while the Affiliated Unitholder Exchange Ratio will be 1.0328 MPLX Common Units for each ANDX Common Unit held, subject to customary post-closing adjustments.

The following unaudited pro forma condensed combined financial statements, which are referred to as the unaudited pro forma financial statements, have been prepared to assist in the analysis of financial effects of the Merger. The unaudited pro forma condensed statements of combined income for the year ended December 31, 2018, and the three months ended March 31, 2019, combine the historical consolidated statements of income of MPLX and ANDX, giving effect to the Merger as if it had been completed on January 1, 2018, the beginning of the earliest period presented. The unaudited pro forma condensed statement of combined income for the year ended December 31, 2018 has been derived from MPLX’s and ANDX’s audited consolidated financial statements and related notes included in their respective Annual Reports on Form 10-K for the year ended December 31, 2018. For ANDX during this period, the predecessor period from January 1, 2018 to September 30, 2018 was derived from financial data for the nine months ended September 30, 2018 while the successor period from October 1, 2018 to December 31, 2018 was calculated using the financial data for ANDX’s fiscal year ended December 31, 2018 and subtracting financial data for the nine months ended September 30, 2018. The unaudited pro forma condensed statement of combined income for the three months ended March 31, 2019 was derived from MPLX’s and ANDX’s unaudited condensed consolidated financial statements and related notes contained in their respective Quarterly Reports on Form 10-Q for the quarterly period ended March 31, 2019. The unaudited pro forma condensed combined balance sheet combines the historical condensed consolidated balance sheets of MPLX and ANDX as of March 31, 2019, giving effect to the Merger as if it had been completed on March 31, 2019. The historical consolidated financial statements of ANDX have been adjusted to reflect certain reclassification and other conforming adjustments in order to align to MPLX condensed financial statement presentation.

Effective October 1, 2018, MPC acquired Andeavor, including a controlling interest in ANDX, thus establishing common control between MPLX, ANDX, MPLX GP and ANDX GP. In accordance with the guidance under ASC Topic 805: Business Combinations, the Merger transaction will be accounted for as a reorganization of entities under common control. The assets and liabilities of ANDX transferred between entities under common control will be recorded by MPLX based on MPC’s historical cost basis resulting from MPC’s preliminary purchase price accounting. MPLX will record ANDX’s assets and liabilities at MPC’s basis as of October 1, 2018, the date that common control was first established. The unaudited pro forma financial statements also include successor period results from October 1, 2018 through March 31, 2019 relating to MPC’s period of ownership of ANDX as a result of the October 1, 2018 transaction. The predecessor period from January 1, 2018 through October 1, 2018, which represents ANDX financial results prior to MPC’s period of ownership, is also included to show 2018 pro forma results as if the transaction had occurred on January 1, 2018.

MPC accounted for the acquisition of Andeavor, including its interest in ANDX, using the acquisition method of accounting which requires Andeavor assets and liabilities to be recorded at fair value as of the acquisition date. MPC will complete a final determination of the fair value of certain assets and liabilities within the one year measurement period from the date of the acquisition as required by FASB ASC Topic 805. Due to the level of effort required to develop fair value measurements, the valuation studies necessary to determine the fair value of assets acquired and liabilities assumed are still considered to be preliminary by MPC, including the underlying cash flows used to determine the fair value of identified intangible assets and economic obsolescence adjustments to property, plant and equipment. The size and the breadth of the Andeavor acquisition necessitates the use of the one year measurement period to fully analyze all the factors used in establishing the asset and

 

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liability fair values as of the acquisition date, including, but not limited to, property, plant and equipment, intangible assets, real property, leases, environmental and asset retirement obligations and the related tax impacts of any changes made. Any potential adjustments made could be material in relation to the preliminary values recorded by MPC, and subsequently recorded by MPLX, in relation to MPLX’s acquisition of ANDX.

Assumptions and estimates underlying the adjustments to the unaudited pro forma financial statements, which are referred to as the pro forma adjustments, are described in the accompanying notes. The historical consolidated financial statements have been adjusted in the unaudited pro forma financial statements to give effect to pro forma events that are: (i) directly attributable to the Merger; (ii) factually supportable; and (iii) with respect to the unaudited pro forma statements of income, expected to have a continuing impact on the combined results of MPLX and ANDX following the Merger. The unaudited pro forma financial statements have been presented for illustrative purposes only and are not necessarily indicative of the operating results and financial position that would have occurred if the Merger had been completed as of the beginning of the periods presented, nor is it necessarily indicative of future operating results or financial position of the combined partnership.

The unaudited pro forma financial statements, although helpful in illustrating the financial characteristics of the combined partnership under one set of assumptions, do not reflect the benefits of expected cost savings (or associated costs to achieve