5/3/2024
By Mary Holcomb, Digital Editor
(P&GJ) — Energy Transfer’s Sunoco LP and NuStar Energy L.P. have announced the successful approval of their merger by NuStar unitholders on May 1. Initially disclosed in January, the merger involves NuStar merging with a Sunoco subsidiary, signaling a significant step towards industry consolidation.
Preliminary results indicate an overwhelming 69% approval from NuStar’s outstanding common unit holders. Final voting results will be disclosed in a Form 8-K filed with the U.S. Securities and Exchange Commission (SEC). Pending customary closing conditions, the transaction is slated to conclude on or around May 3, 2024.
As per the terms unveiled earlier, upon finalization of the merger, NuStar’s common unitholders will receive 0.400 of a Sunoco common unit for each NuStar common unit. Additionally, NuStar unitholders are set to receive Sunoco’s first-quarter 2024 distribution.
This development marks a significant step forward following Sunoco’s January announcement of its intent to acquire NuStar Energy in a landmark $7.3 billion deal, inclusive of debt.
The acquisition grants Sunoco access to NuStar’s extensive transportation and storage infrastructure, encompassing approximately 9,500 miles of pipeline and 63 terminals.
NuStar’s diverse portfolio, spanning crude terminals, pipelines, refined products terminals, and a significant ammonia pipeline, offers Sunoco strategic exposure to key regions like the West Coast and Midwest. Market analysts foresee substantial cost savings of $150 million by the third year post-merger, underscoring the operational efficiencies and synergies anticipated from the integration.
The acquisition underscores Sunoco’s strategic shift towards diversification beyond its core business of motor fuels distribution. The equity component of the deal is valued at $2.99 billion, with NuStar shareholders to receive 0.400 of a Sunoco share for each NuStar unit held, valuing Sunoco’s shares at $23.78—a premium of 31.9% to NuStar’s last closing price.
As the merger moves towards finalization, stakeholders await the realization of synergies and the combined entity’s enhanced capabilities in navigating the evolving energy landscape. With regulatory approvals underway and integration plans in motion, Sunoco and NuStar stand poised to embark on a new chapter of growth and value creation in the energy sector.
