Sunoco LP announced Monday it intends to purchase San Antonio pipeline and terminal company NuStar Energy in an all-equity transaction valued at approximately $7.3 billion.
The Dallas-based fuel distribution giant said in a news release it would issue 0.4 common units for each NuStar unit, a 24% premium. The deal, which includes assumed debt and diversifies the master limited partnership’s business, is expected to close in the second quarter pending regulatory approval.
Sunoco, whose general partner is owned by Dallas-based Energy Transfer, also said in the release that it has locked in a $1.6 billion 364-day bridge term loan to refinance NuStar’s preferred A, B and C units, subordinated notes, revolving credit facility and receivables financing agreement. Sunoco, fresh off its recently announced deal with 7-Eleven to offload 204 convenience stores, predicts that the deal with NuStar will produce run-rate synergies of “at least $150 million” by the third year of combined operations, as well as “approximately $50 million” a year of extra cash flow from “refinancing high-cost floating rate capital,” according to the release.
NuStar, with operations in the U.S. and Mexico, has roughly 9,500 miles of pipeline and 63 terminal and storage facilities that store and distribute crude oil, refined products and more. Its combined system has approximately 49 million barrels of storage capacity, according to the release.
Weil, Gotshal & Manges and Vinson & Elkins acted as Sunoco’s legal advisors, while Wachtell, Lipton, Rosen & Katz and Sidley Austin served as NuStar’s legal advisors, according to the release.
Representing Sunoco, Weil’s team was led by partner Michael J. Aiello (New York), assisted by partner Sachin Kohli (New York), counsel Claudia Lai (Dallas) and New York associates Emily Ross, Erin Bertens, Eileen Creaser and assisted by Ragan Minor, as well as Dallas associate Olga Cosme Toledo, Banking & Finance co-head Courtney Marcus (Dallas), Banking & Finance counsel Brendan Conley (Dallas), Energy partners Omar Samji (Houston) and Cody Carper (Houston), as well as Energy associate Humzah Yazdani (Houston).
The Vinson & Elkins team was led by corporate partners Lande Spottswood (Houston), Jackson O’Maley (Houston) and Ramey Layne (Houston) and associate Walt Baker (Houston), finance partner James Longhofer (Houston) and associates Arthur Munoz (Dallas) and Joe Kmak (Houston), and tax partners Ryan Carney (Houston) and Paige Anderson (Richmond, Virginia) and associate Tyler Underwood (Dallas).
For NuStar, the Sidley Austin deal team included partners George Vlahakos (Houston) and Angela T. Richards (Houston) and Eric M. Winwood (Dallas), with assistance from Tanner Groce (Houston) and Sabina Wahl (Houston).
Truist Securities served as financial advisor to Sunoco. Truist and Bank of America provided committed financing. Truist was advised by Bracewell with a team led from Houston by partners Heather Brown and Will Anderson, along with Counsel Jennifer Dill and associates Dylan Benac and Andrew Monk.
Barclays served as the financial advisor to NuStar.