Energy Transfer Partners Buying Sunoco For $5.3 Billion

June 2012 Vol. 239 No. 6

On the heels of its purchase of Southern Union Group, Dallas-based Energy Transfer Partners announced April 30 plans to acquire Sunoco for $5.3 billion.

The combination will create one of the largest and most diversified energy partnerships in the country by expanding ETP’s geographic footprint into the Marcellus Shale and strengthening its presence in the transportation, terminaling and logistics of crude oil, NGLs and refined products.

The merger consideration represents a 29% premium to the 20-day average closing price of Sunoco shares as of April 27, 2012. By acquiring Sunoco, 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% interest in Sunoco Logistics Partners’ limited partner units and Sunoco’s branded retail business, which generates additional stable cash flows from a portfolio of 4,900 retail locations in the U.S.

“This transaction represents the next step in Energy Transfer Partners’ transformation into a more diversified enterprise with an integrated and expanded footprint,” said Kelcy Warren, ETP’s CEO and chairman of the board of directors. “Our goal is to derive more of our distributable cash flow from the transportation of heavier hydrocarbons like crude oil, NGLs, and refined products.

“With this transaction, we make a major move in that direction, bringing our cash flow mix related to the combined enterprise’s pipeline businesses to 70% natural gas and 30% heavier hydrocarbons. At the same time, we will enhance the size and scale of the ETP platform by creating new service capabilities and entering new geographic operating areas.”

Sunoco’s logistics and retail businesses will continue to maintain headquarters in the Philadelphia area. Sunoco will continue its plans for exiting its refining business.