Marathon Petroleum Corporation (MPC) is currently offering to buy back $4 billion USD of their stock (reference).
The minimum they will pay is $56, and the maximum is $63.
Given that this equity is currently trading at $63.61, why would someone want to do this?
Even if MPC was currently trading at only $63, why would it be appealing to sell it back to MPC instead of just trading it on the open market?
One would sell the shares for the same reasons they are sold on the open market. Indeed, many share buybacks are performed on the open market, see how does a share buyback work
Additionally, companies may directly buy back large positions from major investors. If you have a major position, it can be difficult to sell it without affecting the price. In this case it can be more profitable to sell a share at 98% of its market price and not drive the price down.
The price was around $60/share when the buyback was announced. My wild guess is that in response to selling off the Speedway brand, they were concerned about investors dumping stock, which could send the price much lower. By offering a minimum price, they can absorb the more "panicky" sellers and keep the price above $56. At the same time, if the price did (and apparently has) gone above $63, they see less need to reduce the number of outstanding shares.
A sale via a buy-back, has two major differences between a sale on the open market. One it is a significant statement of confidence in the company by the current stockholders. Two, it prevents the price dropping due to a large sale. Typically, a sale that can be described in percentages, is due to either gain or loss of confidence in the company. If someone is selling 5% of a company, that means they have decided that it is more valuable to have something else. But if someone who owns 10% sells half of that, not only do they get cash, the value of their remaining stock rises. So the sale doesn’t represent the same loss of confidence in the company that it would be if it was sold to a 3rd party.
