DALLAS -- With the news that Energy Transfer Equity LP (ETE), parent company of Energy Transfer Partners LP (ETP), has held talks to sell gas station and convenience-store operator Sunoco LP, speculation immediately turned to buyers.
Candidates to buy the retail network could include Alimentation Couche-Tard Inc., Valero Energy Corp. or Tesoro Corp., sources told Reuters, which broke the story.
As reported in a McLane/CSP Daily News Flash, ETE held conversations to sell Sunoco earlier this year after it was approached by at least one interested company, the news agency said, citing three people familiar with the matter who asked not to be identified because the deliberations were confidential.
Karen Romer, spokesperson for Laval, Quebec-based Couche-Tard, told Reuters that the company is always looking for acquisitions but would not comment on whether the company had approached ETE with an interest in Sunoco. San Antonio-based Tesoro also declined comment, while Valero, also based in San Antonio, did not respond to a request for comment.
The potential sale would involve ETE’s ownership of the general partnership of Sunoco, which could be valued at more than $2 billion, the sources said.
It would also divest a 36.4% stake in the limited partnership in Sunoco owned by ETP, a master limited partnership (MLP), the people cited said. Sunoco has a market capitalization of $3.3 billion, said the report.
The discussions about a sale never advanced because of disagreements over Sunoco’s valuation, the people told the news agency. ETE may choose to revisit the potential divestment if it receives new interest, they said.
The Williams Connection
In September 2015, ETE entered into a deal to acquire natural-gas pipeline MLP The Williams Cos. Inc. in a transaction valued at $37.7 billion.
The talks to possibly sell Sunoco underscore ETE’s efforts to bolster its balance sheet after a plunge in oil prices made its pending acquisition of Williams more financially burdensome than it previously envisioned, according to the Reuters report.
In other company news, ETE CFO Jamie Welch, who was fired last month, is suing the company for breach of contract.
The company has not made any public statements about why Welch was terminated, but a New York Times report said it was over major internal disagreements about the terms of the Williams deal. Welch argued that the deal’s terms would crush the combined new company under a mountain of debt.
In a U.S. Securities & Exchange Commission (SEC) filing, ETE named Thomas E. Long as the new CFO and affirmed that replacing Welch “was not based on any disagreement with respect to any accounting or financial matter involving the partnership or any of its affiliates.”
Dallas-based ETE is an MLP that owns the general partner and 100% of the incentive distribution rights (IDRs) of ETP and Sunoco LP. Its family of companies owns and operates approximately 71,000 miles of natural gas, natural gas liquids, refined products and crude oil pipelines. ETP is an MLP owning and operating one of the largest and most diversified portfolios of energy assets in the United States.
ETP acquired Sunoco Inc. in April 2012.
Houston-based Sunoco LP is a master limited partnership (MLP) that operates 900 convenience stores and gas stations under several brands, including Stripes and Aloha Island Mart. It operates 725 Stripes c-stores in Texas, New Mexico and Oklahoma, 125 Mid-Atlantic Convenience Stores (MACS) and Tigermarket c-stores in Virginia, Maryland, Tennessee, Georgia, and 50 Aloha, Shell and Mahalo c-stores and gas stations in Hawaii. It distributes motor fuel to gas stations, c-stores, independent dealers, commercial customers and distributors located in more than 30 states at 6,800 sites, both directly and through its 31.58% interest in Sunoco LLC, owned in partnership with ETP. Its parent, ETE, owns Sunoco LP’s general partner and incentive distribution rights. ETP owns a 36.4% limited partner interest.
Effective Jan. 1, 2016, Sunoco LP acquired the remaining 68.42% of Sunoco LLC and 100% interest in the legacy Sunoco Inc. retail business from Energy Transfer Partners (ETP), including 438 company-operated Sunoco and APlus branded c-stores and other retail fuel outlets across the country, for $2.226 billion.
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