Susser Heads West With Aloha Petroleum Buy

HOUSTON – Susser Petroleum Partners LP is on the move with its acquisition of Aloha Petroleum Ltd. The base purchase price for Aloha Petroleum is approximately $240 million.

Honolulu-based Aloha Petroleum is the largest independent gasoline marketer and one of the largest convenience store operators in Hawaii, with an extensive wholesale fuel distribution network and six fuel storage terminals on the islands.  

"Hawaii is a great new market for us with an economy that has grown faster than the overall U.S. economy in the last few years," said Bob Owens, Susser Petroleum Partners CEO. "Aloha Petroleum has an impressive legacy of growth, profitability and operational excellence. The overall transaction is compelling in that the price represents an approximate seven-time run-rate EBITDA multiple. Additionally, most of the cash flow is expected to constitute qualifying income."

Aloha Petroleum currently markets via approximately 100 Shell, Aloha, and Mahalo branded fuel stations throughout the state, about half of which are company operated. 

"Aloha Petroleum will allow us to expand our current geographic footprint and extend our overall business capabilities into refined products terminals. We see the integration of terminals, retail and wholesale operations within Aloha as a strong platform in Hawaii as well as a model for the expansion of our overall core business. On behalf of our partnership, I would like to extend a very warm welcome to Aloha Petroleum's management team, employees and customers," Owens said.

First Dropdown Deal

The deal comes as Susser also agreed to acquire Mid-Atlantic Convenience Stores LLC from Energy Transfer Partners LP (ETP) in a transaction valued at approximately $768 million in what is the first dropdown transaction between Susser and ETP.

The consideration payable by Susser will consist of approximately 4 million newly issued Susser Petroleum Partners common units and $556 million of cash, subject to customary closing adjustments. Susser plans to initially finance the cash portion by utilizing availability under the revolving credit facility, with longer term financing through a combination of debt and equity.

The transaction is expected to be immediately accretive to distributable cash flow per unit for both Susser and ETP.

The assets owned by Mid-Atlantic Convenience Stores include the Mid-Atlantic Convenience Stores (MACS) and Tigermarket locations that were previously acquired by ETP.  Both businesses are currently operated and supplied by ETP's Sunoco subsidiary.

The dropdown will include approximately 110 company-operated retail convenience stores and 210 dealer-operated and consignment sites from the MACS/Tigermarket businesses. The combined portfolio includes locations in Virginia, Washington, DC, Maryland, Tennessee and Georgia.

Both transactions are expected to close in the fourth quarter and are subject to customary closing conditions, required consents and other regulatory approvals.

In addition, Susser Petroleum Partners has closed a new revolving credit facility with a syndicate of banks that provides a base $1.25-billion revolving credit facility and includes an accordion feature that provides flexibility to increase the facility by an additional $250 million, subject to certain conditions. The facility matures in September 2019.

The expansion of the revolver from a current $400-million credit facility limit will allow the partnership to finance dropdowns and acquisitions and provide significant liquidity for ongoing organic growth.

Sunoco Rebirth

Susser Petroleum Partners also plans to change its name to Sunoco LP and its ticker symbol to SUN. The change in name and ticker symbol is intended to align the partnership's legal and marketing name with that of ETP's iconic brand, Sunoco. The SUN symbol traded on the New York Stock Exchange for almost 87 years until the sale of Sunoco to ETP in October 2012.  The change is expected to occur in the fourth quarter.

Susser Petroleum Partners distributes approximately 1.7 billion gallons of motor fuel annually to Stripes and Sac-N-Pac convenience stores, independently operated consignment locations, convenience stores and retail fuel outlets operated by independent operators and other commercial customers in Texas, New Mexico, Oklahoma, Kansas and Louisiana.

Energy Transfer Partners is a master limited partnership that owns and operates approximately 35,000 miles of natural gas and natural gas liquids pipelines. ETP owns 100 percent of Sunoco Inc. with a network of more than 5,000 Sunoco-branded retail sites in 24 states, and 100 percent of Susser Holdings Corp., which operates more than 640 convenience stores, primarily in Texas. 

ETP also owns the general partner, 100 percent of the incentive distribution rights and approximately 50.2 percent of the limited partnership interests in Susser Petroleum Partners, a wholesale fuel distributor.  ETP's general partner is owned by Energy Tranfer Equity.