Oil refining and marketing company Marathon Petroleum Corp. (NYSE: MPC) has agreed to merge with Andeavor (NYSE: ANDV), another refining and marketing firm, in a deal valued at $23.3 billion on an equity basis and an enterprise value of $35.6 billion. The cash-and-stock deal is valued at $152.27 per Andeavor share, which shareholders may exchange for 1.87 shares of Marathon stock or cash, subject to proration of 15% of Andeavor’s outstanding stock. The price reflects a premium of 24.4% to Friday’s closing price of Andeavor stock.

The two firms combined posted revenues of more than $100 billion in 2017 and the combination, if approved by regulators and both companies’ shareholders, will result in one of the country’s largest downstream (refining and marketing) firms. Both firms also own midstream and logistics assets (pipelines and gathering systems). The combined firm will have an enterprise value of around $90 billion.

Gary Heminger, Marathon’s CEO, said:

Each of our operating segments are strengthened through this transaction, as it geographically diversifies our refining portfolio into attractive markets, increases access to advantaged feedstocks, enhances our midstream footprint in the Permian basin, and creates a nationwide retail and marketing portfolio that will substantially improve efficiencies and enhance our ability to serve customers.

Andeavor was formed in 2017 by the merger of Tesoro and Western Refining, and its refineries are located mainly in California and the western United States. Marathon Petroleum was spun out of Marathon Oil Corp. (NYSE: MRO) in 2011, with assets located primarily in the Midwest, the Gulf Coast and the Southeast.

The combined company will be the top-ranked U.S. refiner by capacity and a top-five refiner globally, with throughput capacity of over 3 million barrels per day. Marathon’s midstream business will include two master limited partnerships (MLPs): MPLX L.P. (NYSE: MPLX) and Andeavor Logistics L.P. (NYSE: ANDX). Marathon will own the general partner and be the largest unitholder in each of the separate MLPs.

Heminger will become CEO of the combined company, which will be headquartered in Findlay, Ohio, Marathon’s current home. Andeavor CEO Greg Goff will become executive vice chairman of the merged firm, and the current plan calls for the combined company to maintain an office in San Antonio, Andeavor’s current headquarters.

The deal is expected to close in the second half of this year, subject to approvals. Marathon will issue new stock in connection with the transaction, and its shareholders will own about 66% of the combined company.

Marathon’s stock traded down about 5.3% in Monday’s premarket to $77.10. Its 52-week trading range is $49.30 to $83.27, and the 12-month consensus price target is $84.17.

Andeavor shares traded up more than 19% at $145.89 in Monday’s premarket, after closing at $122.38 on Friday. The stock’s 52-week range is $78.25 to $126.11, and the consensus price target is $135.39.

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