Sunoco plans to acquire NuStar Energy for approximately $7.3 billion after recently agreeing to sell 204 convenience stores to 7-Eleven for $1 billion.
Under the terms of their all-equity agreement, NuStar shareholders will receive 0.4 Sunoco common units for each NuStar unit, implying a 24% premium on the 30-day volume-weight average price (VWAP) of both companies as of Jan. 19.
The transaction was unanimously approved by both companies’ board of directors and is expected to close in the second quarter.
According to a press release, Sunoco’s strategic acquisition will:
- Increase stability: Diversifies business, adds scale, and captures benefits of vertical integration by combining two stable businesses
- Strengthen financial foundation: Continues Sunoco’s successful capital allocation strategy on a larger scale, improving the partnership’s credit profile, and supporting a growing distribution
- Enhance growth: More cash flow generation for reinvestment and growth across an expanded opportunity set
See also: Sunoco to sell 204 fuel stations to 7-Eleven
The transaction is “immediately accretive,” Sunoco added, and will result in at least $150 million of run-rate synergies by Year 3 and save the company approximately $50 million per year of additional cash flow from refinancing high-cost capital.
The deal with 7-Eleven includes stores in West Texas, New Mexico, and Oklahoma. Sunoco also said it plans to acquire liquid fuels terminals in Amsterdam, Netherlands, and Bantry Bay, Ireland from Zenith Energy.