January 24, 2024 [Sunoco]- Sunoco LP (NYSE: SUN) (“Sunoco” or the “Partnership”) and NuStar Energy L.P. (NYSE: NS) (“NuStar”) announced today that the parties have entered into a definitive agreement whereby Sunoco will acquire NuStar in an all-equity transaction valued at approximately $7.3 billion, including assumed debt.

Transaction Details

Under the terms of the 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 364-day bridge term loan to refinance NuStar’s Series A, B and C Preferred Units, Subordinated Notes, Revolving Credit Facility, and Receivables Financing Agreement.

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.¹

Strategic Rationale

• Increases Stability: Diversifies business, adds scale, and captures benefits of vertical integration by combining two stable businesses
• Strengthens Financial Foundation:Continues Sunoco’s successful capital allocation strategy on a larger scale, improving the Partnership’s credit profile, and supporting a growing distribution
• Enhances Growth:More cash flow generation for reinvestment and growth across an expanded opportunity set

Positive Financial Outlook

• Accretion: Immediately accretive with 10%+ accretion to distributable cash flow per LP unit by the third year following close
• Synergies: At least $150 million of run-rate synergies by the third year following close
• Financial Savings: Approximately $50 million per year of additional cash flow from refinancing high-cost floating rate capital
• Leverage: Will achieve leverage target of 4.0x within 12-18 months post close
• Distribution Growth: Supports continued distribution growth while maintaining strong coverage

Prior to closing, NuStar will make a cash distribution of $0.212 per common unit to its common unitholders.

Conference Call Information

Sunoco LP management will hold a conference call on Monday, January 22 at 10:00 a.m. Eastern Standard Time (9:00 a.m. Central Standard Time) to discuss the transaction. To participate, dial 877-407-6184 (toll free) or 201-389-0877 at least 10 minutes before the call and ask for the Sunoco LP conference call. The conference call will also be accessible live and for later replay via webcast in the Investor Relations section of Sunoco’s website.

Advisors

Truist Securities served as the exclusive financial advisor to Sunoco. Truist and Bank of America provided committed financing. Weil, Gotshal & Manges LLP and Vinson & Elkins LLP acted as Sunoco’s legal advisors.

Barclays served as the exclusive financial advisor to NuStar. Wachtell, Lipton, Rosen & Katz and Sidley Austin LLP acted as NuStar’s legal advisors.

Pro Trial: Access 13,300 Tank Terminal and Production Facilities

13,300 tank storage and production facilities as per the date of this article. Click on the button and register to get instant access to actionable tank storage industry data