Sunoco SUN-N said on Monday it would acquire fuels storage and pipeline operator NuStar Energy NS-N in a deal valued at about $7.3-billion including debt, as it tries to diversify its core business beyond distribution of motor fuels.
The equity portion of the deal comes up to $2.99-billion, and NuStar’s shareholders stand to receive 0.400 of a Sunoco share for each NuStar unit they hold, valuing Sunoco’s shares at $23.78. That represents a premium of 31.9 per cent to NuStar’s last closing price.
The deal, which has been approved by the boards of both the companies, will give Sunoco access to NuStar’s transportation and storage facilities, including a portfolio of about 9,500 miles of pipeline and 63 terminals.
The companies have flagged cost savings of $150-million by the third year following closing of the deal, expected in the second quarter of 2024.
Shares of Sunoco were down 5 per cent in premarket trading, while shares of NuStar were up 23 per cent.
Earlier this month, Sunoco agreed to sell 204 convenience stores in West Texas, New Mexico and Oklahoma to 7-Eleven Inc for about $1-billion. It said it would also acquire liquid fuels terminals in Amsterdam in the Netherlands and Bantry Bay in Ireland from Zenith Energy.
Sunoco, a Dallas-based company, is an affiliate of U.S. pipeline operator Energy Transfer, which is controlled by billionaire Kelcy Warren.
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