DALLAS -- Holding to a steady beat, Energy Transfer Partners (ETP) has established a brisk pace with both its internal transformation and growth focus, executing a convenience-store drop-down transaction with its Mid-Atlantic Convenience Stores (MACS) network while at the same time, organizing a deal to buy Aloha Petroleum in Honolulu.
The company even bundled the announcements with the name change of its newly acquired Susser Petroleum LP, dropping it in favor of the more familiar Sunoco name. As of the fourth quarter, the master-limited partnership or MLP will be known as Sunoco LP and run under the SUN stock-ticker symbol.
Strategic Rhythm
All three moves appear in sync with previously announced goals and strategies, with the noteworthy aspects being the pace of execution and how multiple transactions seem to be unfolding simultaneously.
“This has been part of an overall step in the strategy that Energy Transfer talked about when it first bought Sunoco,” said Vicki Granado, an ETP spokesperson. “There would not be an exact number, but several steps in integrating the two companies [Sunoco and Susser].”
She told CSP Daily News that the MACS transaction was its first step in that dropdown strategy.
Valued at $768 million, the deal is made up of 4 million newly issued SUSP common units of stock and $556 million in cash, subject to customary closing adjustments. The assets include the MACS and Tigermarket c-store locations that were previously acquired by ETP. Both businesses are currently operated and supplied by ETP’s Sunoco subsidiary.
The dropdown will include approximately 110 company-operated retail convenience stores and 210 dealer-operated and consignment sites from the MACS/Tigermarket businesses. The combined portfolio includes locations in Virginia, Washington, D.C., Maryland, Tennessee and Georgia.
In the 50th State
Meanwhile, the decision to buy Honolulu-based Aloha Petroleum Ltd. appears to be one of opportunity and overall direction. When the company laid out its plans for growth earlier this year, it made reference to filling in gaps between its East Coast and Texas operations, as well as a moving up into the Midwest and West to the Coast. And according to local reports, Aloha Petroleum had been reviewing its options, including finding a buyer.
“Hawaii is a great new market for us with an economy that has grown faster than the overall U.S. economy in the last few years,” said Bob Owens, Susser Petroleum Partners’ CEO, in a statement. “Aloha Petroleum has an impressive legacy of growth, profitability and operational excellence. The overall transaction is compelling in that the price represents an approximate 7x run-rate EBITDA multiple. Additionally, most of the cash flow is expected to constitute qualifying income.”
Aloha Petroleum is the largest independent gasoline marketer and one of the largest c-store operators in Hawaii, with a wholesale fuel distribution network and six fuel-storage terminals on the islands. Aloha currently markets through approximately 100 Shell, Aloha and Mahalo branded fuel stations throughout the state, about half of which are company operated. The base purchase price for Aloha is approximately $240 million, subject to a post-closing earn-out, certain closing adjustments, and before transaction costs and expenses.
“[ETP] is committed to this, and we believe in its value for the overall portfolio,” Granado said. “We wanted to grow the business, and it’s the way to build the right platform to leverage the strength of [Susser’s] Stripes [c-store] brand.”
When asked if the acquisition was potentially happening too fast or too soon, Granado disagreed, saying, “They’ve laid out their strategy as to how they saw the business and are moving forward.”
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