Dive Brief:
- Sunoco LP has agreed to acquire fellow Texas-based oil and gas company NuStar Energy in an all-equity transaction valued at $7.3 billion, according to a Monday announcement.
- The deal aims to strengthen the stability and financial foundation of each company, among other benefits, according to the announcement. It has been unanimously approved by both firms’ board of directors and is expected to close in the second quarter of 2024.
- This continues a pivotal time for Sunoco, which just two weeks ago agreed to sell over 200 convenience stores in the U.S. to 7-Eleven for about $1 billion.
Dive Insight:
When Sunoco agreed to divest its remaining Stripes convenience stores and Laredo Taco Company restaurants on Jan. 11, the deal ran counter to a trend that has seen oil brands get back into fully owned retail stores in the past few years.
When asked about Sunoco’s direction, one expert pinpointed the astronomical difference in money to be made between retail and fuel operations.
“I think at the end of the day, major oil is making their money off of major oil,” Peter Rasmussen, founder and CEO of c-store consultancy Convenience and Energy Advisors, said in a recent interview. “You could have a retail division, but it is such a small percentage to their overall scope.”
With Sunoco’s $7.3 billion acquisition of NuStar, that seems to be the case.
Once the deal closes, Sunoco will own San Antonio-based NuStar’s 9,500 miles of pipeline and 63 terminal and storage facilities in the U.S. and Mexico. These facilities store and distribute crude oil, refined products, renewable fuels, ammonia and specialty liquids.
On the financial side, the deal offers Sunoco more cash flow and a larger operating platform to take on more acquisitions and organic growth, according to a company presentation detailing the acquisition.
Based in Dallas, Sunoco LP is a master limited partnership whose business includes the distribution of motor fuel to approximately 10,000 convenience stores, independent dealers, commercial customers and distributors in more than 40 U.S. states and territories.
