SUN
Sunoco Lp
NYSE
8-K: Sunoco LP to Acquire Parkland Corporation for $9.1 Billion, Including Debt
Sentiment:
Merger Announcement
5 May 2025 8:36 AM
Sunoco LP will acquire Parkland Corporation in a cash and equity deal valued at approximately $9.1 billion, including assumed debt, forming a new publicly-traded entity, SUNCorp.
Capital raise
Sunoco has secured a $2.65 billion 364-day bridge term loan for the proposed cash consideration.
The bridge facility is expected to be permanently financed through a combination of senior notes and a preferred equity offering prior to closing.
Summary
- Sunoco LP (SUN) has entered into an agreement to acquire Parkland Corporation (PKI) for approximately $9.1 billion, including assumed debt.
- The transaction involves a mix of cash and equity, with Parkland shareholders receiving 0.295 SUNCorp units and C$19.80 for each Parkland share.
- Parkland shareholders can elect to receive C$44.00 in cash or 0.536 SUNCorp units per share, subject to proration.
- Sunoco intends to form a new publicly-traded Delaware limited liability company named SUNCorp, LLC (SUNCorp).
- SUNCorp will hold limited partnership units of Sunoco that are economically equivalent to Sunoco's publicly-traded common units on a one-to-one basis.
- Sunoco has secured a $2.65 billion bridge term loan to fund the cash portion of the acquisition.
- The deal is expected to close in the second half of 2025, pending shareholder and regulatory approvals.
- The acquisition is expected to be immediately accretive, with a projected 10%+ accretion to distributable cash flow per common unit by Year 3.
- Sunoco anticipates achieving $250 million in run-rate synergies by Year 3 and returning to a 4x long-term leverage target within 12-18 months post-close.
Sentiment
Score: 7
Explanation: The document presents a positive outlook due to the expected accretion, synergies, and strategic benefits of the acquisition. However, the presence of risks and uncertainties associated with the transaction tempers the overall sentiment.
Positives
- The acquisition is expected to be immediately accretive to Sunoco's distributable cash flow per common unit.
- The combined company is projected to achieve $250 million in run-rate synergies by Year 3.
- The transaction diversifies Sunoco's portfolio and geographic footprint.
- The acquisition is expected to increase cash flow generation for reinvestment and distribution growth.
- Sunoco is committed to maintaining employment levels in Canada and investing in Parkland's Burnaby Refinery.
- The combined company's expanded free cash flow will provide additional resources for reinvestment in Canada, the Caribbean, and the United States.
Negatives
- The transaction is subject to shareholder and regulatory approvals, which could delay or prevent the deal from closing.
- Integrating Parkland's business with Sunoco's may present challenges and could impact the realization of anticipated synergies.
- Potential litigation related to the transaction could be instituted against Sunoco, Parkland, or their directors.
- The pendency of the merger may impact Parkland's ability to pursue certain business opportunities or strategic transactions.
- Sunoco's issuance of additional units representing limited partner interests in connection with the proposed transaction could cause dilution.
Risks
- The completion of the proposed transaction on anticipated terms and timing is not guaranteed.
- Obtaining regulatory approvals, creating SUNCorp, and securing Parkland shareholder approval are all conditions that must be met.
- The anticipated benefits of the proposed transaction may not be realized or may not be realized within the expected time period.
- Disruptions from the proposed transaction could harm Sunoco's or Parkland'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 Parkland's ability to access debt markets.
- Business uncertainty during the pendency of the proposed transaction could affect Sunoco's and/or Parkland's financial performance and operating results.
- The transaction may be more expensive to complete than anticipated.
Future Outlook
The combined company anticipates significant growth in cash flow and opportunities for reinvestment across the U.S., Canada, Europe, and the Caribbean. Sunoco expects to maintain financial discipline and a strong balance sheet, targeting a 4x leverage ratio within 12-18 months post-close.
Industry Context
This acquisition would create the largest independent fuel distributor in the Americas, with over 15 billion gallons distributed annually. The deal reflects a trend towards consolidation in the energy distribution sector, as companies seek to achieve greater scale, diversify their operations, and improve their supply chain efficiencies. Competitors like Global Partners LP and Sprague Resources LP may face increased pressure to pursue similar strategic moves to remain competitive.
Comparison to Industry Standards
- The combined entity will become the largest independent fuel distributor in the Americas, surpassing competitors like Global Partners LP and Sprague Resources LP in terms of gallons distributed annually.
- The projected $250 million in run-rate synergies by Year 3 is a significant target, comparable to synergy targets in other large-scale energy infrastructure mergers.
- The expectation to return to a 4x leverage target within 12-18 months post-close aligns with industry standards for maintaining a strong balance sheet following a major acquisition.
- Sunoco's commitment to maintaining a Canadian headquarters and investing in the Burnaby Refinery demonstrates a focus on responsible stewardship, similar to commitments made by other energy companies in cross-border transactions.
Stakeholder Impact
- Parkland shareholders will receive a combination of cash and SUNCorp units.
- Sunoco and Parkland employees may experience changes as a result of the integration.
- Customers of both companies may benefit from an expanded network and service offerings.
- Suppliers may see changes in their relationships with the combined company.
- The transaction is expected to improve the combined company's credit profile, benefiting creditors.
Next Steps
- Parkland shareholders need to approve the transaction.
- Customary regulatory and stock exchange listing approvals must be obtained.
- SUNCorp intends to file relevant materials with the SEC, including a registration statement on Form S-4 and/or Form S-1.
- Sunoco will work to integrate Parkland's business and achieve the projected synergies.
- Sunoco will refinance the bridge loan with senior notes and preferred equity.
Key Dates
- February 14, 2025: Sunoco's Annual Report on Form 10-K was filed with the SEC.
- May 2, 2025: 7-day VWAPs of Parkland and Sunoco used to determine the premium for the transaction.
- May 4, 2025: Date of the Arrangement Agreement between Sunoco and Parkland.
- May 5, 2025: Joint press release and investor presentation announcing the acquisition.
- May 5, 2025: Sunoco LP management will hold a conference call to discuss the transaction.
- Second half of 2025: Expected closing date of the transaction.
Keywords
Sunoco, Parkland, Acquisition, SUNCorp, Merger, Fuel Distribution, Synergies, Distributable Cash Flow, Refinery, Energy Infrastructure
SUN
Sunoco Lp
NYSE
Sector: Energy
Filings with Classifications
Capital raise
29 May 2025 7:00 AM
Merger Announcement
- Committed bridge financing is in place for the cash portion of the acquisition.
Better than expected
29 May 2025 7:00 AM
Merger Announcement
- The transaction offers a 25% premium to Parkland shareholders based on recent trading prices.
- It provides flexible consideration options, including immediate cash liquidity and participation in future upside via SunocoCorp units.
- The deal is expected to generate significant annual run-rate synergies of US$250 million, indicating improved financial performance for the combined entity.
- The creation of SunocoCorp offers a more tax-efficient structure for non-U.S. and institutional investors, enhancing shareholder value.
Worse than expected
28 May 2025 9:29 PM
Acquisition Update
- The unaudited pro forma net income attributable to limited partners for the full year ended December 31, 2024, shows a loss of $(262) million, which is a negative financial outcome for the combined entity.
Capital raise
28 May 2025 9:29 PM
Acquisition Update
- Sunoco has secured a $2.65 billion 364-day bridge term loan to fund the cash consideration for the Parkland Acquisition.
- In connection with the Parkland Acquisition, Sunoco would issue $1 billion in preferred units.
- Sunoco would issue $1.7 billion in aggregate principal amount of senior notes for the Parkland Acquisition.
- SunocoCorp (a wholly-owned subsidiary of SunocoCorp) is expected to issue 51,442,494 common units to Parkland shareholders as part of the acquisition consideration.
Capital raise
28 May 2025 9:25 PM
Acquisition Update
- Sunoco has secured a $2.65 billion 364-day bridge term loan to fund the proposed cash consideration for the Parkland Acquisition.
- In connection with the Parkland Acquisition, Sunoco would issue $1 billion in preferred units.
- In connection with the Parkland Acquisition, Sunoco would issue $1.7 billion aggregate principal amount of senior notes.
Worse than expected
28 May 2025 9:25 PM
Acquisition Update
- The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2024, shows a net loss attributable to limited partners of $(262) million, which is a negative financial outcome for the combined entity on a pro forma basis.
- The pro forma basic net income (loss) per limited partner unit for the year ended December 31, 2024, is also negative at $(1.40).
Worse than expected
8 May 2025 4:25 PM
Quarterly Report
- Net income decreased compared to the same period last year, primarily due to increased operating expenses, depreciation, and interest expense.
Capital raise
8 May 2025 4:25 PM
Quarterly Report
- Sunoco has secured a $2.65 billion 364-day bridge term loan for the proposed cash consideration of the Parkland acquisition.
- The transaction is expected to be funded using cash on hand and amounts available under the Partnership's Credit Facility.
Capital raise
6 May 2025 8:50 AM
Merger Announcement
- The $2.6 billion cash consideration is supported by a fully committed bridge facility.
- Sunoco expects to permanently finance this through a combination of senior notes and preferred equity prior to close.
- The transaction includes the creation of SUNCorp, a new publicly traded vehicle, to support growth and attract a new investor base.
Better than expected
6 May 2025 7:12 AM
Earnings Release
- Adjusted EBITDA and Distributable Cash Flow were significantly higher than the same quarter last year.
Capital raise
5 May 2025 9:45 PM
Merger Announcement
- Sunoco has secured debt financing commitments of $7.55 billion to fund the acquisition.
- The transaction involves the issuance of new SUNCorp Units to Parkland shareholders.
Delay expected
5 May 2025 9:43 PM
Merger Announcement
- The Effective Time does not occur on or prior to February 4, 2026, or such later date as may be agreed to in writing by the parties (the Outside Date ) (provided that the Outside Date may be extended by either party for 90 days following February 4, 2026 if certain required regulatory approvals have not yet been obtained).
Capital raise
5 May 2025 9:21 AM
Merger Announcement
- Sunoco has secured a $2.65 billion 364-day bridge term loan for the proposed cash consideration.
- The bridge loan is expected to be permanently financed through a combination of senior notes and a preferred equity offering prior to closing.
Capital raise
5 May 2025 8:36 AM
Merger Announcement
- Sunoco has secured a $2.65 billion 364-day bridge term loan for the proposed cash consideration.
- The bridge facility is expected to be permanently financed through a combination of senior notes and a preferred equity offering prior to closing.
Capital raise
20 March 2025 5:03 PM
Debt Offering Announcement
- Sunoco LP is conducting a private offering of $1 billion in senior notes due 2033.
- The offering was upsized from an initial $750 million.
- The proceeds will be used to repay existing indebtedness.
Capital raise
20 March 2025 8:06 AM
Current Report on Form 8-K
- Sunoco LP announced a private offering of $750 million in senior notes due 2033.
- The company intends to use the net proceeds from the offering to repay indebtedness, including redeeming in full NuStar Logistics, L.P.'s 5.750% senior notes due 2025 and repaying a portion of the outstanding borrowings under Sunoco's revolving credit facility.
- The Notes Offering is not conditioned on the consummation of the acquisition of the German and Polish terminalling assets.
Capital raise
14 February 2025 1:59 PM
Annual Results
- The company has the ability to further incur additional debt under its Credit Facility and the indentures governing its senior notes.
- The company may issue debt or equity securities prior to that time as it deems prudent to provide liquidity for new capital projects or other partnership purposes.
Better than expected
11 February 2025 7:21 AM
Earnings Release
- The company's net income, Adjusted EBITDA, and Distributable Cash Flow all significantly increased compared to the previous year.
- The company is targeting a distribution growth rate of at least 5% for 2025, indicating confidence in future performance.
- The company anticipates strong Adjusted EBITDA growth in 2025.
Better than expected
27 January 2025 7:18 AM
Distribution Announcement
- The company announced a 1.25% increase in the quarterly distribution, which is better than the previous quarter.
- The company also announced a target of at least 5% distribution growth for 2025, which is a positive outlook for investors.
Worse than expected
7 November 2024 12:04 PM
Quarterly Report
- The company's net income decreased significantly due to unfavorable inventory valuation adjustments and increased expenses, indicating worse than expected results.
Worse than expected
6 November 2024 8:04 AM
Quarterly Report
- The net income decreased significantly from $272 million to $2 million year-over-year, indicating a substantial decline in profitability despite improvements in other areas.
Better than expected
8 August 2024 11:59 AM
Quarterly Report
- The company's net income and adjusted EBITDA were significantly better than the same period last year due to the gain on the West Texas sale and the positive impact of acquisitions.
Capital raise
8 August 2024 11:59 AM
Quarterly Report
- Sunoco issued $1.5 billion in senior notes in April 2024 to fund the NuStar acquisition and related transactions.
- The company may issue debt or equity securities prior to the end of 2024 as deemed prudent to provide liquidity for new capital projects or other partnership purposes.
Better than expected
7 August 2024 7:36 AM
Quarterly Report
- The company reported a record net income of $501 million, significantly higher than the $87 million reported in the same quarter last year.
- Adjusted EBITDA, excluding transaction-related expenses, was $400 million, exceeding the $250 million reported in the same quarter last year.
- Distributable Cash Flow, as adjusted, was $295 million, up from $175 million in the prior year's second quarter.
Better than expected
9 May 2024 11:56 AM
Quarterly Report
- Net income and Adjusted EBITDA both increased year-over-year, indicating better than expected financial performance.
- The company's motor fuel sales volume increased by 9%, demonstrating strong operational performance.
Capital raise
9 May 2024 11:56 AM
Quarterly Report
- The Partnership issued $750 million of 7.000% senior notes due 2029 and $750 million of 7.250% senior notes due 2032 in a private offering on April 30, 2024.
- The net proceeds from the offering were used to repay NuStar's debt, fund the redemption of NuStar's preferred units, and pay offering fees and expenses in connection with the merger.
Capital raise
8 May 2024 7:27 AM
Quarterly Report
- The company issued $1.5 billion in unsecured notes on April 30, 2024.
- The proceeds from this offering will be used to fund the repayment of NuStar's credit and receivables facilities, and redeem NuStar's preferred equity and subordinated notes.
Better than expected
8 May 2024 7:27 AM
Quarterly Report
- The company reported a record first quarter net income of $230 million, significantly higher than the $141 million reported in the same period last year.
- Adjusted EBITDA for the quarter was $242 million, up from $221 million in the first quarter of 2023.
- The company increased its full-year Adjusted EBITDA guidance to $1.46 billion to $1.52 billion.
Better than expected
3 May 2024 4:45 PM
Merger Announcement
- The acquisition is expected to be immediately accretive to distributable cash flow per LP unit, growing to greater than 10% accretion by the third year following close.
- The company also expects to realize at least $150 million of expense and commercial synergies and at least $50 million per year of additional cash flow from refinancing activity.
Capital raise
30 April 2024 4:47 PM
Debt Offering Announcement
- Sunoco LP completed a private offering of $1.5 billion in senior notes.
- The offering included $750 million in 7.000% Senior Notes due 2029 and $750 million in 7.250% Senior Notes due 2032.
- Net proceeds were approximately $1.485 billion after deducting discounts and commissions.
- The funds will be used to repay NuStar Energy debt, redeem NuStar's preferred units, and cover offering expenses related to the merger.
Capital raise
30 April 2024 4:45 PM
Debt Offering Announcement
- Sunoco LP completed a private offering of $1.5 billion in senior notes.
- The net proceeds will be used to repay NuStar's debt, redeem NuStar's preferred units, and cover offering expenses.
Capital raise
16 April 2024 7:06 PM
Debt Offering Announcement
- Sunoco LP has priced a private offering of $1.5 billion in senior notes.
- The offering includes $750 million of 7.000% senior notes due 2029 and $750 million of 7.250% senior notes due 2032.
- The proceeds will be used to refinance debt and redeem preferred units of NuStar Energy in connection with the pending merger.
Capital raise
16 April 2024 6:59 PM
Debt Offering Announcement
- Sunoco has priced a private offering of $1.5 billion in senior notes.
- The offering is split into $750 million of 7.000% notes due 2029 and $750 million of 7.250% notes due 2032.
- The proceeds will be used to refinance NuStar's debt and preferred units, and to fund the merger.
Capital raise
16 April 2024 8:36 AM
Current Report on Form 8-K
- Sunoco is conducting a private offering of $1.5 billion in senior notes due 2029 and 2032.
- The proceeds will be used to repay NuStar Energy's debt, fund the redemption of NuStar's preferred units, and pay offering fees and expenses related to the pending merger.
- The offering is not contingent on the completion of the NuStar Merger.
Capital raise
16 April 2024 8:34 AM
Debt Offering Announcement
- Sunoco is conducting a private offering of $1.5 billion in senior notes.
- The notes are split into $750 million due in 2029 and $750 million due in 2032.
Capital raise
16 February 2024 12:21 PM
Partnership Agreement Details
- The partnership agreement authorizes the issuance of an unlimited number of additional partnership interests without unitholder approval.
- The document mentions that the partnership may fund acquisitions through the issuance of additional common units or other partnership interests.
Worse than expected
14 February 2024 9:43 AM
Quarterly Report
- The company reported a net loss for the fourth quarter of 2023, compared to a net income in the same period of 2022.
- The company's net income for the full year 2023 decreased compared to 2022.
Capital raise
22 January 2024 5:26 PM
Merger Announcement
- Sunoco has secured a $1.6 billion 364-day bridge term loan to refinance NuStar's existing debt.
- The transaction is an all-equity deal, with NuStar unitholders receiving Sunoco units.
Disclaimer: This summary was generated by artificial intelligence and its accuracy is not guaranteed. The information provided here is for general informational purposes only and does not constitute financial advice, recommendation, or endorsement of any kind. It may contain errors or omissions. You should not rely on this information to make financial decisions. Always seek the advice of a qualified financial professional before making any investment or financial decisions. Use of this information is at your own risk.