Energy Transfer Partners to Acquire Susser

DALLAS -- Energy Transfer Partners LP (ETP), owner of Sunoco Inc., is acquiring Susser Holdings Corp. in a deal valued at $1.8 billion.

By acquiring Susser Holdings, ETP will own the general partner interest and the incentive distribution rights in Susser Petroleum Partners LP, approximately 11 million Susser Petroleum common units -– representing approximately 50.2 percent of outstanding units -- and Susser's retail operations consisting of 630 Stripes convenience stores.

In a joint conference call this morning, executives from ETP, Sunoco and Susser Holdings said the merger is expected to close in the third quarter.

Once completed, ETP will "drop down" all of its retail assets to Susser Petroleum, which will continue to operate as a publicly traded master limited partnership, according to Martin Salinas, chief financial officer at ETP. As a result, the retail business will operate separately from ETP.

ETP agreed to the deal with Susser Holdings because of the Corpus Christi, Texas-based company's business model, which capitalizes on the strong economy and favorable demographic trends in Texas and surrounding states, explained Jamie Welch, group chief financial officer and head of corporate development at Energy Transfer Equity LP. ETP was also particularly attracted to Susser's land bank of retail locations and its "tangible" retail expansion plans for 2014-2015, he said.

The addition of Susser Holdings to the Sunoco network of more than 5,000 retail stores, primarily on the East Coast, will broaden Sunoco's geographic footprint by giving it an exceptional base in Texas and the surrounding states. One of the compelling synergies of the deal, Welch explained, is the ability to leverage the iconic Sunoco brand while also continuing to geographically expand the overall Stripes brand.

Calling the deal a bet on Texas, Sunoco President and CEO Bob Owens said the United States is experiencing an "energy renaissance" and Texas is at the epicenter.

"This makes sense both strategically and geographically," Owens stated.

Integration

Owens and Sam L. Susser, chairman and CEO of Susser Holdings, will lead the integration efforts. Once complete, Owens will serve as president and CEO of the combined businesses, reporting to Kelcy Warren, chairman and CEO of ETP. Sam Susser will continue as chairman of Susser Petroleum.

The management team will combine members from both organizations to prepare for and execute the integration of the combined businesses.

According to Owens, integration considerations include:

• Achieve buying power synergies related to fuel, convenience merchandise and other procurement activities

• The addition of Susser to the Sunoco network broadens Sunoco's geographic footprint and creates a portfolio of strong fuel brands and convenience store models to deploy optimally, with the strong capital and operating discipline that has allowed both Sunoco and Susser to generate sustained earnings growth over time. It also offers Stripes the opportunity to expand into adjacent states.

• The combination will create immediate shared service synergies, improved economies of scale, information technology systems cost savings, and operational synergies related to personnel.

Synergy opportunities are expected to exceed $70 million annually from fuel, merchandising and improved "buying power" reflecting economies of scale. The commercial and operational synergies are expected to be realized within six to 12 months after closing.

Financial Details

The boards of directors of both companies have unanimously approved the deal. Under the terms of the merger agreement, the shareholders of Susser Holdings will have the option to elect to receive either $80.25 in cash or 1.4506 ETP common units, or a combination of both, for each share held.

"The combination with Energy Transfer Partners and Sunoco is the right next step for Susser Holdings and delivers significant value for Susser Holdings' shareholders. This transaction also enables our shareholders who elect ETP units to participate in the future growth of the retail business," said Sam Susser.