In a deal between two Texas energy giants, Dallas-based Sunoco LP has agreed to acquire San Antonio-based NuStar Energy LP in an all-equity transaction valued at roughly $7.3 billion, including assumed debt.
Sunoco said it has secured a $1.6 billion 364-day bridge term loan to refinance NuStar’s Series A, B, and C preferred units, subordinated notes, revolving credit facility, and receivables financing agreement.
The transaction is expected to close in the second quarter.
Sunoco relocated from Philadelphia to Dallas in 2016
Sunoco, which relocated from Philadelphia to Dallas in 2016, said the acquisition will increase stability by diversifying its business, add scale, and capture benefits of vertical integration by combining two stable businesses. It also strengthens its financial foundation, the company said.
The company said that more cash flow generation will be created for reinvestment and growth across an expanded set of opportunities.
Sunoco said the deal will create at least $150 million of run-rate synergies by the third year following close, along with roughly $50 million per year of additional cash flow from refinancing high-cost floating rate capital.
Prior to closing, NuStar will make a cash distribution of $0.212 per common unit to its common unitholders.
The acquisition follows news earlier this month that Irving-based 7-Eleven had acquired 204 stores from Sunoco in a deal that the Dallas Morning News said was valued at $950 million.
Sunoco said that Truist Securities served as its exclusive financial adviser in the NuStar acquisition. Truist and Bank of America provided committed financing. Weil, Gotshal & Manges LLP and Vinson & Elkins LLP acted as Sunoco’s legal advisers.
Barclays was the exclusive financial adviser to NuStar. Wachtell, Lipton, Rosen & Katz and Sidley Austin LLP acted as NuStar’s legal advisers.
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