Energy Transfer Makes Final Retail Dropdown to Sunoco LP

DALLAS and HOUSTON — Calling it "a critical milestone," Energy Transfer Partners LP (ETP) and Sunoco LP announced that ETP will dropdown its remaining 68.42-percent interest in Sunoco LLC and 100-percent interest in the legacy Sunoco retail business to Sunoco LP for $2.226 billion. The transaction includes 438 company-operated Sunoco and APlus convenience stores.

“This win-win transaction completes [the] process,” Sunoco LP CEO Bob Owens said during a conference call Monday. 

The transaction will be effective Jan. 1 and is expected to close in February. ETP will remain Sunoco LP’s largest unitholder with a 46-percent interest.

Once the deal is completed, ETP will have completed a total dropdown of $5.7 billion worth of assets. Sunoco LP will either distribute motor fuel or operate c-store locations in 30 states. In addition to the Sunoco LLC retail and fuel distribution assets, Sunoco LP will now have the former Susser Holdings Corp. Stripes locations, Mid-Atlantic Convenience Stores locations and Aloha Petroleum Ltd. convenience stores under its umbrella.

“We have a unique growth plan,” said Owens, noting the company’s business model is “different” from its closest competitors Alimentation Couche-Tard Inc., Casey’s General Stores Inc., Murphy USA Inc. and CST Brands Inc. "We are expanding organically and through M&A [merger and acquisition] activity.”

Owens stressed that long-term fuel supply agreements, fuel margins, convenience store operations and the Laredo Taco Co. restaurant business Sunoco LP acquired via the Susser transaction will provide impressive stability for decades to come.

In fact, during a question-and-answer session with Wall Street analysts, the company revealed the Laredo Taco Co. concept will soon be tested at Sunoco retail locations in the Northeast.


CSNews Online reported earlier this month that ETP was in talks with Sunoco LP to dropdown these remaining assets. However, the company originally said all of the retail dropdowns would be completed by no later than mid-2017.

Regarding why the timeframe sped up so dramatically, Jamie Welch, ETP’s group financial officer, said the final dropdown “was weighing heavily on the stock prices” of both Sunoco LP and ETP.

“This transaction will be tremendously accretive for [Sunoco LP]. It allows it to complete its overall integration process,” said Welch. The deal will be “break even” for ETP on a credit-neutral basis, but the $2.2 billion that the master limited partnership will receive in 2016 will be very important.

This ad will auto-close in 10 seconds