Sunoco Reveals $7.3 bn Acquisition of NuStar Energy to Expand Business Beyond Motor Fuels Distribution

By Editor


Sunoco has revealed its strategic move to acquire fuels storage and pipeline operator NuStar Energy in a deal valued at approximately $7.3 billion, including debt. This acquisition aims to diversify Sunoco’s core business, extending beyond the distribution of motor fuels.

The equity portion of the deal amounts to $2.99 billion, with NuStar’s shareholders slated to receive 0.400 of a Sunoco share for each NuStar unit they hold. This valuation puts Sunoco’s shares at $23.78, representing a substantial premium of 31.9 percent over NuStar’s last closing price.

Sunoco executives emphasized the significance of having a fuel distribution business in a call, stating that it helps maintain midstream assets and often lays the foundation for additional growth and supply synergies.

The deal, approved by both boards, provides Sunoco with access to NuStar’s extensive transportation and storage facilities, including a portfolio comprising approximately 9,500 miles of pipeline and 63 terminals. NuStar’s assets cover crude terminals and pipelines, refined products terminals and pipelines, a sizable ammonia pipeline, and exposure to the West Coast and Midwest, according to Fitch analyst Michael Ruggirello.

Sunoco, headquartered in Dallas, operates as an affiliate of U.S. pipeline operator Energy Transfer, under the control of billionaire Kelcy Warren.

Both companies have outlined anticipated cost savings of $150 million by the third year post the deal’s closing, which is expected in the second quarter of 2024. Analysts from J.P. Morgan noted that Sunoco’s acquisition represents a transformative shift in strategy, highlighting the crude pipeline and storage assets it would gain from NuStar.

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