Sunoco to Buy NuStar Energy for $7.3 Billion

All-Stock Purchase of Pipeline and Fuel Storage Company Will Close in Q2
Sunoco gas station
A customer refuels at a Sunoco gas station along Interstate 87 in Hastings-On-Hudson, N.Y. (Eilon Paz/Bloomberg News)

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Sunoco LP, a U.S. gas station owner, agreed to acquire pipeline and fuel storage company NuStar Energy LP for about $7.3 billion in a move to buy up more of a key part of its supply chain.

The all-stock deal is expected to close in the second quarter, the companies said Jan. 22 in a statement. Sunoco fell 7% at 11:01 a.m. in New York after plunging as much as 9.7%. NuStar surged as much as 19%.

The acquisition would expand crude oil transportation and storage for Sunoco, one of the largest independent fuel retailers in the U.S. NuStar Energy’s assets, which include pipelines and terminals for oil, chemicals, ammonia and other fuel-related products, are mainly in the Midwest and West Coast, with some operations in Mexico. 

The deal comes just over a week after Sunoco reshuffled some of its assets, selling 204 convenience stores to 7-Eleven and agreeing to acquire liquids terminals in Europe.

Buying Nustar will also help Sunoco diversify, increase its ability to use more of its own terminals and allow the company to optimize fuel supply cost, according to a presentation. It’ll also allow Sunoco to expand its presence across more of the U.S., the company said.

“There’s a strong argument to be made that SUN is being opportunistic in buying refined products assets when others are uninterested for what will be a stable to gently declining market over time in gasoline,” said Gabe Moreen, a managing director at Mizuho.

Sunoco’s general partner is owned by Energy Transfer Operating LP, a subsidiary of Energy Transfer LP. NuStar rejected a takeover attempt from Energy Transfer in 2018. When asked during a conference call with analysts on Jan. 22 how the latest NuStar proposal fits with Energy Transfer, Sunoco executives said the deal should be thought of as a Sunoco acquisition.

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Recent oil and gas deals have faced regulatory hurdles. Occidental Petroleum Corp. said Jan. 22 the Federal Trade Commission asked for more information on its proposed acquisition of CrownRock LP. Last month, Chevron Corp. and Hess Corp. received a second request from the FTC for additional information on their planned $53 billion deal. But Sunoco executives said on the call they don’t expect the NuStar proposal to face significant anti-trust issues.

Advisers for the deal include Truist Securities and Bank of America. Weil, Gotshal & Manges LLP and Vinsons & Elkins LLP acted as Dallas-based Sunoco’s legal advisers.