Energy Transfer Partners to buy Sunoco for $5.3 bln
Energy Transfer Partners (NYSE:ETP), a natural-gas pipeline operator, has agreed to acquire independent refiner Sunoco (NYSE:SUN) in a $5.3 billion deal that would create one of the largest and most diversified energy partnerships in the U.S.
ETP said it will pay either $50 in cash, 1.0490 of its common units or a combination of $25 in cash and 0.5245 common units for each Sunoco share. The estimated $50.13 per share value is a 23% premium to Sunoco's Friday closing price.
The acquisition expands the footprint of the Dallas company in the U.S. northeast and also diversifies its holdings in a shift toward more crude and other heavy hydrocarbons. Natural gas companies have been hammered by plunging prices, which have recently hit 10-year lows.
"This transaction, which will be immediately accretive, represents the next step in Energy Transfer Partners' transformation into a more diversified enterprise with an integrated and expanded footprint," ETP's CEO Kelcy Warren said.
"As we have said in the past year, our goal is to derive more of our distributable cash flow from the transportation of heavier
hydrocarbons like crude oil, NGLs, and refined products.
"With this transaction, we make a major move in that direction, bringing our cash flow mix related to the combined enterprise's
pipeline businesses to approximately 70 percent natural gas and 30 percent heavier hydrocarbons.
Sunoco's president and CEO Brian P. MacDonald said: "This transaction will enable Sunoco's businesses to realize their full potential by becoming an important part of a diversified leader in the energy industry.
"In addition, it delivers an attractive premium to our shareholders, while enabling them to participate in the future growth of the business. The combination with ETP provides substantial future value-creation opportunities for Sunoco shareholders and ETP unitholders alike."
Energy Transfer said it will also gain distribution rights in Sunoco Logistics Partners , Sunoco’s 32.4-per-cent interest in Sunoco Logistics Partners’ limited partner units and Sunoco’s branded retail business.
The deal has been approved by the boards of both companies and is expected to close in the third or fourth quarter of this year but is pending regulatory and and shareholder approval.
Sonoco will continue to be based in the Philadelphia area and its previous goal of exiting the refining business is ongoing.