Energy Transfer Partners, L.P. And Philadelphia-based Sunoco, Inc. announced a definitive merger agreement with ETP buying Sunoco in a transaction valued at $50.13.
The deal consists about 50 percent cash and 50 percent Energy Transfer common units, represents a 29 percent premium to the 20-day average closing price of Sunoco shares ETP will also own Sunoco’s general partner interest and the incentive distribution rights (IDRs) in Sunoco Logistics Partners as well as Sunoco’s 32.4 percent interest inSunoco Logistics Partners’ limited partner units and Sunoco’s branded retail business.
Sunoco’s area holdings include a now-closed refinery on the Delaware, Pennsylvania line near Marcus Hook.
Sunoco has struggled with losses in the refining business, closing, selling and putting sites up for sale.
“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,” said Brian P. MacDonald, Sunoco’s president and CEO. “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 Sunocoshareholders and ETP unitholders alike.”
When MacDonald took the helm at Sunoco in March, he warned that the refinery losses were endangering the company.
MacDonald said, “ETP recognizes that the steady, ratable cash flows that our logistics and retail businesses generate are backed by great assets, deep expertise, and the potential for future growth. ETP has an interest in growing its marcellus shale-related activity, and I am pleased that the combined enterprise will retain a strong Pennsylvania presence.”
The shale deposits have yielded large volumes of natural gas.
Sunoco’s logistics and retail businesses will continue to keep headquarters in the Philadelphia area. In addition, under the merger agreement, Sunoco will continue its plans for exiting its refining business as previously announced, as well as continue its plans for the proposed refinery joint venture being discussed by Sunoco and The Carlyle Group at its Philadelphia refinery.
