Sunoco LP, based in Dallas, is set to acquire NuStar Energy LP, an oil pipeline and terminal operator, in a substantial $7.3 billion deal. The acquisition aims to diversify Sunoco’s business and secure a crucial segment of its supply chain.
By incorporating NuStar’s existing pipelines and terminals for fuel-related products, including oil and ammonia in the Midwest and on the West Coast, Sunoco plans to enhance its crude oil transportation and storage system.
Sunoco CEO Joseph Kim expressed gratitude to the dedicated employees of both companies, emphasizing the collaborative efforts to elevate the combined entity to new heights of success.
“As we bring together two strong and stable companies, we would not be here today if not for the many talented and hardworking employees of both Sunoco and NuStar,” Sunoco CEO Joseph Kim told investors, per reports. “We look forward to working with the NuStar team to take the combined company to new levels of success.”
Sunoco LP, a Dallas-based gas station owner, is in the process of acquiring NuStar Energy LP, an oil pipeline and terminal operator, in a significant $7.3 billion deal. This transaction has raised concerns about San Antonio potentially losing another corporate headquarters.
The strategic move by Sunoco is aimed at diversifying its business operations and gaining ownership of a crucial aspect of its supply chain. The acquisition is expected to bolster Sunoco’s crude oil transportation and storage system by integrating NuStar’s existing pipelines and terminals, facilitating the transport of fuel-related products such as oil and ammonia in the Midwest and on the West Coast.
During an exchange with investors, Sunoco CEO Joseph Kim highlighted the collaborative effort between the two companies, acknowledging the hard work and talent of their respective employees. He expressed optimism about the future success of the combined entity, emphasizing the shared commitment to reaching new levels of achievement.
Following the acquisition, Valero Energy Corp., a company spun off by NuStar in 2007, now stands as the sole major energy company in the city.
NuStar shares experienced a significant increase of over 18%, closing Monday at $21.32, while Sunoco faced a decrease of about 4.5%, closing at $56.74.
This all-stock deal comes shortly after Sunoco, one of the largest independent fuel retailers in the nation, made strategic moves, including the sale of 204 convenience stores in Texas, Oklahoma, and New Mexico to 7-Eleven in a $1 billion deal. Additionally, Sunoco agreed to acquire liquid terminals in Europe, with the terms of that acquisition remaining undisclosed.
As per the terms announced on Monday, NuStar’s unitholders will receive 0.4 Sunoco common units for each NuStar unit, valued at approximately $23.78 based on Friday’s closing price. This represents a nearly 32% premium compared to NuStar’s closing price of $18.03 in San Antonio.
Sunoco’s CEO, Joseph Kim, expressed that the move was attractive due to Sunoco’s current limited fuel distribution in the West. With a terminal in Brownsville, where products are brought in by ship, the integration of NuStar’s pipelines is anticipated to enable Sunoco to expand its presence across the entire United States.
“Bottom line, the proforma company will be more stable, stronger financially, and better positioned for growth,” he said, per reports.
