Sunoco LP Announces Sale of West Texas Assets, Acquisition of European Liquid Fuels Terminals, and Reaffirms 2024 Adjusted EBITDA Guidance Range

Rhea-AI Summary

Sunoco LP (SUN) Announces $1.0 Billion Sale of Convenience Stores to 7-Eleven, Inc. and Intention to Acquire European Liquid Fuels Terminals

Positive

• Sale of 204 convenience stores to 7-Eleven for approximately $1.0 billion
• Intention to acquire liquid fuels terminals in Amsterdam, Netherlands, and Bantry Bay, Ireland
• Expected 2024 Adjusted EBITDA guidance reaffirmed at $975 million to $1 billion

Negative

• None.

Insights

Financial Analyst

The sale of Sunoco's convenience stores to 7-Eleven for $1.0 billion represents a significant liquidity event which can materially reduce leverage on the company's balance sheet. The amendment to the fuel supply agreement implies an increase in fuel gross profit, potentially enhancing Sunoco's profitability margins. The proceeds from this transaction will likely improve the company's financial flexibility, enabling strategic investments or debt reduction, which is often well-received by the market. Investors should note the transaction's expected prompt closure, signaling efficient execution and regulatory confidence.

Market Research Analyst

The strategic divestiture of convenience stores and the concurrent acquisition of liquid fuels terminals in Europe indicate Sunoco's shift towards midstream operations, which are typically characterized by more stable cash flows. This move aligns with industry trends where companies focus on core competencies to optimize their business model. The Amsterdam and Bantry Bay terminals acquisition could enhance Sunoco's supply chain in the East Coast, potentially leading to operational synergies. The expected accretion to unitholders suggests a positive market sentiment in the first year post-acquisition, which could support Sunoco's unit price.

Energy Sector Analyst

The locations of the acquired terminals in Amsterdam and Bantry Bay are of particular interest due to their strategic positioning within the European energy market. The Amsterdam terminal serves as a nexus in the largest refined product trading port in Europe, while the Bantry Bay terminal is integral for Ireland's strategic oil reserves. These assets could provide Sunoco with a competitive advantage in logistics and storage, crucial for maintaining energy supply chains. The company's reaffirmed EBITDA guidance, despite these transactions, indicates management's confidence in the stable financial performance and operational efficiency of Sunoco's expanded portfolio.

DALLAS, Jan. 11, 2024 /PRNewswire/ -- Sunoco LP (NYSE: SUN) ("SUN" or the "Partnership") today announced that it has entered into a definitive agreement for the sale of 204 convenience stores to 7-Eleven, Inc. ("7-Eleven") for approximately $1.0 billion. SUN also announced its intention to acquire liquid fuels terminals in Amsterdam, Netherlands and Bantry Bay, Ireland from Zenith Energy. 

West Texas Sale
On January 11, 2024, SUN entered into a definitive agreement with 7-Eleven to sell 204 convenience stores located in West Texas, New Mexico, and Oklahoma for approximately $1.0 billion, including customary adjustments for fuel and merchandise inventory.  As part of the sale, SUN will also amend its existing take-or-pay fuel supply agreement with 7-Eleven to incorporate additional fuel gross profit.  Proceeds from the sale will allow SUN to materially reduce leverage to execute on future growth opportunities while maintaining a strong balance sheet and multi-year distribution growth.  The transaction is expected to close promptly upon receipt of regulatory approvals and satisfaction of customary closing conditions.

European Terminals Acquisition 
SUN also announced its intention to acquire one hundred percent of the equity interest in Zenith Energy Netherlands Amsterdam B.V., which includes liquid fuels terminals in Amsterdam, Netherlands and Bantry Bay, Ireland.  The definitive purchase agreement will be executed, and the purchase price announced, after completion of the appropriate Dutch works council consultation and information processes, which are currently underway.  The Amsterdam terminal is strategically located in the Port of Amsterdam, which serves as an international hub for the global energy market and is part of the largest refined product trading port in Europe. The Bantry Bay terminal is the largest independent bulk liquids storage terminal in Ireland and provides storage for Ireland's strategic oil reserve.  The acquisition will provide supply optimization for SUN's existing East Coast business and continues SUN's focus on growing its portfolio of stable midstream income. SUN expects this tuck-in acquisition to be accretive to unitholders in the first year of ownership and will be funded using amounts available under SUN's revolving credit facility.  The transaction is expected to close in the first quarter of 2024, subject to customary closing conditions. 

2024 Adjusted EBITDA Guidance Reaffirmed
SUN's previously announced 2024 EBITDA guidance range of $975 million to $1 billion remains unchanged.

Sunoco LP (NYSE: SUN) is a master limited partnership with core operations that include the distribution of motor fuel to approximately 10,000 convenience stores, independent dealers, commercial customers and distributors located in more than 40 U.S. states and territories as well as refined product transportation and terminalling assets. SUN's general partner is owned by Energy Transfer LP (NYSE: ET).

Forward-Looking Statements

This news release may include certain statements concerning expectations for the future that are forward-looking statements as defined by federal law. Such forward-looking statements are subject to a variety of known and unknown risks, uncertainties, and other factors that are difficult to predict and many of which are beyond management's control. An extensive list of factors that can affect future results are discussed in the Partnership's Annual Report on Form 10-K and other documents filed from time to time with the Securities and Exchange Commission.  The Partnership undertakes no obligation to update or revise any forward-looking statement to reflect new information or events.

The information contained in this press release is available on our website at www.sunocolp.com

Contacts

Investors:

Scott Grischow, Treasurer, Senior Vice President – Investor Relations and Mergers & Acquisitions
(214) 840-5660, scott.grischow@sunoco.com

Media:

Alexis Daniel, Manager – Communications
(214) 981-0739, alexis.daniel@sunoco.com

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SOURCE Sunoco LP

FAQ

What is Sunoco LP's ticker symbol?

Sunoco LP's ticker symbol is SUN.

What did Sunoco LP announce regarding the sale of convenience stores?

Sunoco LP announced the sale of 204 convenience stores to 7-Eleven, Inc. for approximately $1.0 billion.

What are the details of Sunoco LP's intention to acquire European liquid fuels terminals?

Sunoco LP plans to acquire liquid fuels terminals in Amsterdam, Netherlands, and Bantry Bay, Ireland, which are expected to be accretive to unitholders in the first year of ownership.

What is Sunoco LP's 2024 Adjusted EBITDA guidance?

Sunoco LP's 2024 Adjusted EBITDA guidance range remains unchanged at $975 million to $1 billion.