Gas station owner Sunoco LP will buy pipeline and liquids terminal operator NuStar Energy in an all-equity transaction valued at around $7.3 billion, including debt, the companies said on Monday in the latest merger deal in the U.S. energy sector.
Under the terms of the definitive agreement, NuStar common unitholders will receive 0.400 Sunoco common units for each NuStar common unit, implying a 24% premium based on the 30-day VWAP’s of both NuStar and Sunoco as of January 19, 2024.
Sunoco has secured a $1.6-billion one-year bridge term loan to refinance NuStar’s Series A, B, and C Preferred Units, Subordinated Notes, Revolving Credit Facility, and Receivables Financing Agreement, Sunoco said..
The Sunoco-NuStar combination diversifies and adds scale to the business, as well as captures the benefits of vertical integration.
The deal is expected to increase distributable cash flow per unit by more than 10% by the third year following the closing of the transaction, which is expected in the second quarter of 2024.
The transaction has been unanimously approved by the board of directors of both companies and is expected to close in the second quarter of 2024 upon the satisfaction of closing conditions, including approval by NuStar’s unitholders and customary regulatory approvals, the companies said.
Prior to closing, NuStar will make a cash distribution of $0.212 per common unit to its common unitholders.
NuStar has around 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 Sunoco-NuStar deal is the latest combination in the U.S. energy industry, following several large merger deals of the past months, including big all-stock acquisitions that both Exxon and Chevron have announced.
In one of the latest transactions, Chesapeake Energy Corporation and Southwestern Energy agreed earlier this month to merge in an all-stock transaction valued at $7.4 billion, which will create the biggest U.S. natural gas producer by market value and production.
