It's Business As Usual At Sunoco Despite Acquisition


"We have nearly 80 percent of our 9,100 sites installed with the capability to offer the instant rollback at the pump, which is really outstanding."

Corey Correnti, BP (page 18)

Young Americans are decreasing the amount they drive and increasing their use of transportation alternatives. The average young person (ages 16 to 34) drove 23 percent fewer miles in 2009 than the average young person in 2001.

Source: U.S. Public Interest Research Group Education Fund/Frontier Group

New owner, Energy Transfer Partners, expects deal to close in the third or fourth quarter

Kelcy Warren, CEO of Energy Transfer Partners (ETP), admits that branching out into retail was not part of the company's game plan, but its $5.3-billion deal to acquire Philadelphia-based Sunoco Inc. has given ETP approximately 4,900 retail locations and that's OK.

"We would not have targeted a retail business as a strategic move for the company; however, it is part of the overall package," Warren said following the acquisition announcement on April 30. "We believe it is extremely well run. We think the cash flows are very sustainable and it is a very good business. We are happy to have it, and committed to the business. We will continue to grow it and manage it with the people who have been doing that so well for quite a while."

For ETP, the key driver behind the deal was diversification. CFO Martin Salinas said the Dallas-based firm felt it needed to diversify its business, so it was not "overly subjected" to natural gas basis risk. Also, its customers were demanding more natural gas liquids (NGL) capabilities.

"This deal is certainly transformational for us. The acquisition of Sunoco provides an attractive platform to our NGL service capabilities, while expanding into the crude and oil refined products of the business," Salinas explained, adding that both companies will benefit from growth opportunities realized through greater scale, increased geographic reach and a broader, more diversified business platform.

Both ETP and Sunoco anticipate minimal disruption as the two companies move toward integration. Sunoco's retail and logistics business will continue to be based in the Philadelphia region, consistent with its current operating presence.

The integration and approval process is expected to take four to six months, meaning the deal will close somewhere in the third or fourth quarter of this year, according to ETP, which as of press time, was putting together an integration team and integration plan. The goal is that by closing, "we are one functioning organization," Salinas said.

Sunoco CEO Brian MacDonald said he and his team are excited to join forces with ETP.

"This was the appropriate next step for Sunoco," said — MacDonald. "This transaction will significantly expand and diversify our business and deliver unique synergies and benefits. We also believe our share-holders are receiving an attractive premium for their shares."

Sunoco recently reported that its retail marketing division lost $6 million in its 2012 fiscal first quarter, compared to a profit of $12 million for the same time period in 2011.

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