Sunoco to be sold for $5.3 billion

Sunoco Inc. will be sold to natural gas company Energy Transfer Partners in a deal valued at about $5.3 billion. Sunoco had been looking to exit the refining business prior to the deal. 

Alex Brandon/AP/File
Gas prices are posted at a Sunoco gas station in Philadelphia in this file photo. Energy Transfer Partners has announced it will buy Sunoco for $5.3 billion.

Natural gas company Energy Transfer Partners is buying Sunoco in a deal valued at about $5.3 billion.

The acquisition would expand the footprint of the Dallas company in the Northeast, and also diversify its holdings in a shift toward more crude and other heavy hydrocarbons. Natural gas companies have been hammered by plunging prices, which have recently hit 10-year lows.

"This transaction, which will be immediately accretive, represents the next step in Energy Transfer Partners' transformation into a more diversified enterprise with an integrated and expanded footprint," said Chairman and CEO Kelcy Warren. "As we have said in the past year, our goal is to derive more of our distributable cash flow from the transportation of heavier hydrocarbons like crude oil, NGLs, and refined products. With this transaction, we make a major move in that direction."

Energy Transfer Partners said the deal will bring its cash flow mix for its pipeline businesses to about 70 percent natural gas, and 30 percent heavier hydrocarbons. Company officials did not return an immediate call from The Associated Press.

The offer includes $25 in cash and a portion of an Energy Transfer Partners unit totaling $50.13 for each Sunoco share. Sunoco shareholders can also opt for $50 in cash or slightly more than one ETP unit.

The price represents a 29 percent premium to the 20-day average closing price of the Philadelphia company's shares as of Friday. The company's stock closed at $40.91, and the $50.13 per share price represents a 23 percent premium to that.

The deal has been approved by the boards of both companies and is expected to close in the third or fourth quarter of this year. Regulators and shareholders must still sign off.

Sonoco will continue to be based in the Philadelphia area and its previous goal of exiting the refining business is ongoing.

Shares of Sunoco Inc. jumped 22 percent, or $9.05, to $49.96 in premarket trading, which could mean that the stock will be hitting four-year highs when the market opens Monday. Shares of Energy Transfer Partners LP rose 12 cents to $48.04 .

You've read  of  free articles. Subscribe to continue.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.