425: Sunoco LP and NuStar Energy L.P. Announce Expiration of Hart-Scott-Rodino Act Waiting Period

Sunoco LP and NuStar Energy L.P. announced the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, satisfying a key condition for Sunoco's pending acquisition of NuStar.

Summary

• Sunoco LP and NuStar Energy L.P. announced the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) on April 8, 2024.
• This expiration satisfies a critical condition for Sunoco's proposed acquisition of NuStar.
• NuStar unitholders are scheduled to vote on the acquisition on May 1, 2024.
• The transaction is expected to close shortly after unitholder approval.
• NuStar unitholders are anticipated to receive Sunoco's distributions for the first quarter of 2024 following the closing of the transaction.
• Sunoco and NuStar made their respective filings required under the HSR Act on February 5, 2024.
• Sunoco voluntarily withdrew its HSR Act notification and report form and refiled it on March 8, 2024.
• The Registration Statement was declared effective by the SEC on April 3, 2024.
• NuStar filed the definitive Proxy Statement/Prospectus on Schedule DEFM14A with the SEC on April 3, 2024, and it was first mailed to NuStar unitholders on or about April 3, 2024.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive as a key regulatory hurdle has been cleared for the acquisition, and the transaction is expected to close soon. However, risks related to integration and unitholder approval remain.

Positives

• Expiration of the HSR Act waiting period removes a major regulatory obstacle to the acquisition.
• The anticipated closing of the transaction shortly after unitholder approval provides clarity and a timeline for investors.
• NuStar unitholders are anticipated to receive Sunoco's distributions for the first quarter of 2024 following the closing of the transaction.

Risks

• The completion of the proposed transaction is subject to NuStar unitholder approval.
• There are risks associated with integrating the businesses and achieving anticipated synergies and value creation.
• Potential litigation relating to the proposed transaction could be instituted against Sunoco, NuStar or the directors of their respective general partners.
• Disruptions from the proposed transaction could harm Sunoco's or NuStar's business.
• Adverse reactions or changes to business relationships could result from the announcement or completion of the proposed transaction.
• Rating agency actions could impact Sunoco's and NuStar's ability to access debt markets.
• Business uncertainty during the pendency of the proposed transaction could affect Sunoco's and/or NuStar's financial performance and operating results.
• Dilution could be caused by Sunoco's issuance of additional units representing limited partner interests in connection with the proposed transaction.
• The transaction may be more expensive to complete than anticipated.

Future Outlook

The transaction is expected to close shortly after NuStar unitholder approval, with NuStar unitholders anticipated to receive Sunoco's distributions for the first quarter of 2024 following the closing.

Industry Context

This announcement reflects ongoing consolidation trends in the energy infrastructure sector, as companies seek to expand their asset base and market reach through strategic acquisitions.

Comparison to Industry Standards

• Similar transactions in the midstream energy sector, such as Energy Transfer's acquisition of Enable Midstream, demonstrate the industry's focus on scale and efficiency.
• The regulatory review process under the HSR Act is a standard step in such mergers, and the expiration of the waiting period indicates that the transaction has passed initial antitrust scrutiny.
• The timeline for unitholder approval and expected closing aligns with typical schedules for similar transactions.

Stakeholder Impact

• NuStar unitholders will vote on the proposed acquisition.
• NuStar unitholders are anticipated to receive Sunoco's distributions for the first quarter of 2024 following the closing of the transaction.
• Employees of both companies may experience changes as a result of the integration.

Next Steps

• NuStar unitholder vote on May 1, 2024.
• Closing of the transaction shortly after unitholder approval.

Key Dates