Company News

Sorting Out Latest Sunoco, ETP Deal

New combined company makes leadership changes

PHILADELPHIA and DALLAS -- Sunoco Logistics Partners LP’s acquisition this week of Energy Transfer Partners LP (ETP) should have little effect on retail arm Sunoco LP, according to industry observers. Although one insider says the deal is an effort to keep Sunoco LP investors happy.

ETP previously acquired all branches of Sunoco in 2012 for more than $5 billion. However, the combined companies continued to operate as separate public businesses.

In this week’s transaction, as reported in a McLane/CSP Daily News Flash, Philadelphia-based Sunoco Logistics Partners actually acquired Dallas’ Energy Transfer Partners, with the publicly traded Energy Transfer Equity remaining the overall parent business.

Under the terms of this week’s transaction, ETP unitholders will receive 1.5 common units of Sunoco Logistics stock for each common unit of ETP they own, essentially bringing the two companies under a single corporate umbrella. Retail unit Sunoco LP will remain the gas station and convenience-store wing of the parent company, executives said.

In the past six months, Sunoco LP’s stock price has dropped from a high of $33.75 per share to as low as $22.64, according to Yahoo Finance. At press time, the stock was trading at $23.07.

Kelcy Warren will be chief executive officer of the combined companies, while other leadership changes include: Energy Transfer President and Chief Operating Officer Mackie McCrea will become chief commercial officer of the merged Sunoco Logistics entity. Sunoco LP Chairman Matt Ramsey will take over as president. Sunoco LP Chief Financial Officer Tom Long would serve as the CFO of the merged business, according to a FuelFix report. Current Sunoco Logistics President and CEO Mike Hennigan and other members of the existing leadership team “will continue in leading management roles of the combined company.”

The transaction was approved by the boards of directors and conflicts committees of both partnerships and is expected to close in the first quarter of 2017.

With this transaction, Sunoco Logistics and ETP expect to build upon their experience working together as partners in several joint ventures to pursue commercial opportunities and to achieve cost savings while enhancing the service capabilities for their customers, the companies said. Sunoco Logistics and ETP expect that the transaction will allow for commercial synergies and costs savings in excess of $200 million annually by 2019.

Energy Transfer Partners LP, Dallas, is a master limited partnership that owns and operates one of the largest and most diversified portfolios of energy assets in the United States. ETP currently owns and operates more than 62,500 miles of natural gas and natural gas liquids pipelines. It also is the parent company of retailer Sunoco LP, a master limited partnership (MLP) that operates approximately 1,300 retail fuel sites and convenience stores (including APlus, Stripes, Aloha Island Mart and Tigermarket brands) and distributes motor fuel to convenience stores, independent dealers, commercial customers and distributors located in 30 states at approximately 6,800 sites.

Sunoco Logistics Partners LP is a master limited partnership that owns and operates a logistics business consisting of a geographically diverse portfolio of complementary pipeline, terminals and acquisition and marketing assets that are used to facilitate the purchase and sale of crude oil, refined products and natural gas liquids and refined products.

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