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Sunoco Begins Expansion of Wholesale Business

After selling off most of its stores, the MLP buys distribution and terminal assets in the Northeast

DALLAS -- Sunoco LP, flush with cash after selling off most of its retail assets, is now investing some of that money in wholesale and storage assets.

The master limited partnership (MLP) has signed a definitive agreement to buy the wholesale refined-fuels business and some fuel terminal assets of Superior Plus Corp., a Toronto-based subsidiary of Superior Plus LP, for $39.8 million. The transaction, subject to purchase price adjustments and closing conditions, should finalize this month. St. Petersburg, Fla.-based Raymond James served as financial adviser to Superior Plus in the deal.

The assets Sunoco LP is buying include much of Superior Plus’ wholesale refined-fuels operations in five Northeast states representing about 100 dealers and several hundred commercial contracts, as well as three pipeline-connected terminals in New York. The wholesale business sells about 200 million gallons of fuel annually, while the three terminals have 429,000 barrels of storage capacity. It’s one of the first deals that advances Sunoco LP’s planned transformation into a more stable income MLP focused on fuel distribution and logistics instead of retailing.

In 2017, the Dallas-based company announced plans to sell off most of its retail business in the continental United States by the end of the year. In January 2018, it finalized the sale of 1,030 stores to 7-Eleven for $3.114 billion, and in April it completed the conversion of its 207 retail sites in several West Texas, Oklahoma and New Mexico to a single commission agent.

In Sunoco LP's most recent earnings call, President and CEO Joe Kim said that with the sale of most of its retail assets complete, the company's focus would turn toward executing its growth plan. “We have developed a robust M&A pipeline that includes multiple acquisition opportunities," he said. "Based on our assessment of various negotiations, we believe that we are well positioned to close on attractive opportunities in the near future.”

In picking acquisitions, Sunoco’s primary focus is on the “highly attractive” fuel distribution and logistics sector. “The sector remains fragmented and trades at reasonable multiples," Kim said at the time. "Numerous opportunities of reasonable size exist for acquisitions and single-digit multiples.”

Sunoco LP has held onto retail sites along the New Jersey and New York toll roads, its APlus franchisee-operated c-stores, and its Aloha Petroleum business unit in Hawaii. It distributes motor fuel to about 9,200 convenience stores, independent dealers, commercial customers and distributors in more than 30 states. Its general partner is owned by Dallas-based Energy Transfer Equity LP.

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