NuStar Energy LP NS shares are trading higher after Sunoco LP SUN announced it will acquire the company in an all-equity transaction valued at roughly $7.3 billion.
As per the terms, NuStar’s common unitholders will receive 0.400 Sunoco common units for each share they hold, implying a 24% premium based on the 30-day VWAP’s of both NuStar and Sunoco as of January 19, 2024.
The deal has been unanimously approved by the board of directors of both companies and is expected to close in the second quarter of 2024 upon the satisfaction of closing conditions.
Post closure, the transaction is expected to immediately benefit Sunoco, with 10%+ accretion to distributable cash flow per LP unit projected by the third year.
Also, the company anticipates at least $150 million of run-rate synergies by the third year and around $50 million per year of additional cash flow from refinancing high-cost floating-rate capital.
Also Read: Sunoco’s Strategic Moves: $1B 7-Eleven Deal, European Terminals Acquisition, Growth Focus
As of Sept. 30, 2023, Sunoco held $647 million of borrowings against its revolving credit facility and other long-term debt of $3.2 billion.
Price Action: NS shares are up 15.2% at $20.77, and SUN is down 6.74% at $55.45 on the last check Monday.
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