This combination will create one of the largest and most diversified energy partnerships in the country by expanding ETP’s geographic footprint and strengthening its presence in the transportation, terminalling and logistics of crude oil, NGLs and refined products. The merger consideration, which consists of $25 in cash and 0.5245 of an ETP common unit, or approximately 50 percent cash and 50 percent ETP common units, represents a 29 percent premium to the 20-day average closing price of Sunoco shares as of April 27, 2012.
Under the terms of the merger agreement, which has been unanimously approved by the boards of directors of both companies, Sunoco shareholders can elect to receive, for each Sunoco common share they own, either $50.00 in cash, 1.0490 ETP common units or a combination of $25.00 in cash and 0.5245 ETP common units. The aggregate cash paid and common units issued will be capped so that the cash and common units will each represent 50 percent of the aggregate consideration. The cash elections and common unit elections will be subject to proration to satisfy this cap. Upon closing, Sunoco shareholders are expected to own approximately 20 percent of ETP common units. In addition, $965 million of Sunoco’s existing notes will remain outstanding.
Sunoco will continue its planned exit of the refinery business. This is a great example of how by simplifying diversified companies, spin offs can lead to strategic deals with buyers interested in only part of the original business.
Disclosure: The author holds no position in any stock mentioned
- Energy Transfer to buy Sunoco for $5.3-billion (theglobeandmail.com)