Morgan Stanley Reports On Sunoco's SunCoke Seperation
Morgan Stanley reported that, as expected in the March 11 note, “This Week in Refining: Macro Headwinds Offsetting 1Q Earnings,” the SunCoke separation will be completed in a “two step process” where SUN will sell up to 20% of SunCoke to the public (in an IPO) and subsequently spin-off the remaining 80% SunCoke to SUN shareholders (6+ months following the IPO). “We believe the already high, net cash position at SUN will rise from $5/sh to ~$13/sh in 3-4 months in connection with the SunCoke IPO and recapitalization. Consistent with the Company's strategy of selling non-core asset and focusing, we believe a large portion of the cash will be re-distributed to shareholders (buy-back or dividend) with some towards growth acquisition. Despite a challenging 1Q11EPS, we reiterate our Overweight rating.”
Sunoco closed yesterday at $44.52.
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