New York, January 23, 2024 - PrismMarketView - Sunoco LP (NYSE: SUN) announced this week it will acquire independent liquids terminal and pipeline operator, NuStar Energy (NYSE: NS), in an all-equity transaction valued at approximately $7.3 billion, including assumed debt. The transaction is expected to close in the second quarter of 2024.
Investors rewarded NuStar, with the energy provider’s share price climbing by 15% at midday on Monday, and closing up nearly 20%, while Sunoco’s stock had fallen almost 7% by midday.
Sunoco outlined its rationale for the move, and the positive financial outlook expected following the close of the deal, including cost savings of $150 million by the third year following closing of the deal. The company stated the acquisition would help diversify its business, adding scale and strengthening its financial foundation, as well as increasing cash flow generation for reinvestment and growth.
On closing, Sunoco and NuStar say the deal will be immediately accretive with 10%+ accretion to distributable cash flow per LP unit, and at least $150 million of run-rate synergies by the third year following the close. The deal will also result in approximately $50 million per year of additional cash flow from refinancing high-cost floating rate capital.
Sunoco’s market cap stands at $5 billion while NuStar’s is around $2.2 billion.
About Sunoco
Sunoco LP (NYSE: SUN) is a master limited partnership with core operations that include the distribution of motor fuel to approximately 10,000 convenience stores, independent dealers, commercial customers and distributors located in more than 40 U.S. states and territories as well as refined product transportation and terminalling assets. SUN’s general partner is owned by Energy Transfer LP (NYSE: ET).
Sunoco LP (NYSE: SUN) is a master limited partnership with core operations that include the distribution of motor fuel to approximately 10,000 convenience stores, independent dealers, commercial customers and distributors located in more than 40 U.S. states and territories as well as refined product transportation and terminalling assets. SUN’s general partner is owned by Energy Transfer LP (NYSE: ET).
About NuStar
NuStar Energy L.P. (NYSE: NS) is an independent liquids terminal and pipeline operator. NuStar currently has approximately 9,500 miles of pipeline and 63 terminal and storage facilities that store and distribute crude oil, refined products, renewable fuels, ammonia and specialty liquids. The partnership’s combined system has approximately 49 million barrels of storage capacity, and NuStar has operations in the United States and Mexico. For more information, visit NuStar Energy L.P.’s website at www.nustarenergy.com and its Sustainability page at https://sustainability.nustarenergy.com/.
NuStar Energy L.P. (NYSE: NS) is an independent liquids terminal and pipeline operator. NuStar currently has approximately 9,500 miles of pipeline and 63 terminal and storage facilities that store and distribute crude oil, refined products, renewable fuels, ammonia and specialty liquids. The partnership’s combined system has approximately 49 million barrels of storage capacity, and NuStar has operations in the United States and Mexico. For more information, visit NuStar Energy L.P.’s website at www.nustarenergy.com and its Sustainability page at https://sustainability.nustarenergy.com/.
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