Energy Transfer Partners To Sell Convenience-stores Business To Sunoco

(RTTNews) - Energy Transfer Partners, L.P. (ETP) will sell its convenience-stores business to its unit Sunoco L.P. (SUN) for about $1.94 billion in cash and stock, the two companies said Wednesday.

The convenience business, Susser Holdings Corp., will be sold to Sunoco, a Houston, Texas-based wholesale fuel distributor and convenience store operator, in a dropdown transaction.

Dallas, Texas-based Energy Transfer or ETP noted that the timing of the dropdown transaction is driven by desire to accelerate Sunoco's exposure to the fast growing retail business.

Susser Holdings' operates convenience stores in Texas, New Mexico and Oklahoma, offering merchandise, food service, motor fuel and other services. The company operates retail stores under the proprietary Stripes convenience store brand.

Sunoco is a master limited partnership or MLP that primarily distributes motor fuel to convenience stores, independent dealers, commercial customers and distributors. The company also operates more than 150 convenience stores and retail fuel sites.

Under the deal, Sunoco will pay to ETP about $970 million in cash and also issue about 22 million of its units valued at $970 million based on the five-day volume-weighted average price of Sunoco's common units as of July 14, 2015.

The transaction, subject to customary closing conditions, is expected to close on August 1.

ETP expects the transaction to be immediately accretive to its distributable cash flow for 2015 and beyond. For Sunoco, the transaction is breakeven with respect to its distributable cash flow in 2015 and significantly accretive thereafter.

In mid-March, ETP announced the second dropdown of a portion of its retail business to Sunoco in a transaction is valued at about $816 million.

Simultaneously with today's transaction, ETP and Energy Transfer Equity L.P. (ETE) announced a deal in which ETP will transfer the general partner interest and incentive distribution rights or IDRs of Sunoco to ETE, in exchange for 21 million ETP units held by ETE.

ETE is a master limited partnership which owns the general partner and 100 percent of the IDRs of ETP.

In addition, ETE agreed to a two-year IDR subsidy, amounting to $35 million per annum, to ETP through June 30, 2017. This replaces an existing $35 million per annum subsidy that would automatically terminate in the event ETP transfers the Sunoco general partner interest and IDRs to ETE. The transaction represents a current value of about $1.2 billion.

ETP is trading at $54.33, up $0.86 or 1.61 percent on a volume of 330,973 shares.

SUN is trading at $41.84, down $1.69 or 3.88 percent on a volume of 285,398 shares. ETE is down $0.45 or 0.69 percent to $64.84.