DALLAS - Sunoco LP (NYSE:SUN) and NuStar Energy L.P. (NYSE:NS) announced the signing of a definitive agreement that will see Sunoco acquire NuStar in an all-equity transaction. The deal, valued at approximately $7.3B, includes the assumption of debt.
Under the agreement terms, NuStar common unitholders will receive 0.400 Sunoco common units for each NuStar common unit they hold, representing a 24% premium based on the 30-day volume-weighted average prices (VWAP) of both companies as of January 19, 2024. Sunoco has arranged a $1.6B bridge term loan to refinance various NuStar debt instruments.
The boards of directors of both companies have unanimously approved the transaction, which is slated for completion in the second quarter of 2024. The closure is subject to the approval of NuStar's unitholders and regulatory permissions. Prior to the deal's finalization, NuStar will distribute a cash dividend of $0.212 per common unit to its unitholders.
The acquisition aims to increase stability by diversifying business operations, adding scale, and capturing vertical integration benefits. Sunoco anticipates that the transaction will be immediately accretive, with over 10% accretion to distributable cash flow per limited partner unit by the third year following the closure. Additionally, the company expects at least $150M in run-rate synergies and about $50M per year in financial savings from refinancing activities. The deal is projected to support distribution growth while achieving a leverage target of 4.0x within 12-18 months post-closure.
Sunoco LP specializes in the distribution of motor fuel to around 10,000 convenience stores, independent dealers, commercial customers, and distributors across more than 40 U.S. states and territories. NuStar Energy L.P. operates as an independent liquids terminal and pipeline operator with facilities in the United States and Mexico.
Truist Securities and Bank of America (NYSE:BAC) provided financial advisory and committed financing to Sunoco, while Barclays (LON:BARC) advised NuStar. Legal advisory roles were filled by Weil, Gotshal & Manges LLP, Vinson & Elkins LLP for Sunoco, and Wachtell, Lipton, Rosen & Katz, Sidley Austin LLP for NuStar.
This news is based on a press release statement. Further details can be found in the Investor Relations sections of both companies' websites. Sunoco LP will discuss the transaction in a conference call on Monday.
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