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Energy Transfer Partners to buy Susser Holdings

Staff writer |
Energy Transfer Partners, L.P. (ETP) has entered into a definitive merger agreement whereby ETP plans to acquire Susser Holdings Corporation (SUSS) in a unit and cash transaction valued at approximately $1.8 billion.

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By acquiring Susser Holdings, ETP will own the general partner (GP) interest and the incentive distribution rights (IDRs) in Susser Petroleum Partners LP (NYSE:SUSP), approximately 11 million SUSP common units (representing approximately 50.2 % of SUSP's outstanding units), and SUSS' existing retail operations, consisting of 630 convenience store locations.

Under the terms of the merger agreement, which has been unanimously approved by the Boards of Directors of ETP and SUSS, the shareholders of Susser Holdings will have the option to elect to receive either $80.25 in cash or 1.4506 ETP common units, or a combination of both, for each share held.

The shareholder election is subject to proration to ensure that aggregate cash paid and common units issued will each represent 50% of the aggregate merger consideration. Given the capital appreciation embedded in the stock price of Susser Holdings, the receipt of ETP units on a tax deferred basis should be attractive to long-term Susser shareholders.

ETP has entered into a support agreement with shareholders representing 10% of the outstanding Susser Holdings' shares, pursuant to which such shareholders have agreed to vote their shares in favor of the merger and to elect to receive 100% ETP common units as their consideration, subject to the same pro ration as all other shareholders.

The addition of Susser to the Sunoco network of more than 5,000 retail stores, primarily on the East Coast, broadens Sunoco's geographic footprint by giving it an exceptional base in Texas and the surrounding states. The pro-forma business will have tremendous fuel and retail capabilities that are expected to generate sustained earnings growth over time.

Overall, synergy opportunities are expected to exceed $70 million annually from fuel, merchandising and improved "buying power" reflecting economies of scale. Those commercial and operational synergies are expected to be realized within 6 to- 12 months post-closing. Additional savings are likely as systems and processes from both businesses are consolidated.


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