SUN
Sunoco Lp
NYSE
425: Sunoco to Acquire Parkland Corporation for $9.1 Billion, Creating Americas' Largest Independent Fuel Distributor
Sentiment:
Merger Announcement
6 May 2025 8:50 AM
Sunoco LP announces a definitive agreement to acquire Parkland Corporation in a cash and equity transaction valued at $9.1 billion, including assumed debt, aiming to create the largest independent fuel distributor in the Americas.
Capital raise
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.
Summary
- Sunoco LP will acquire 100% of Parkland Corporation's outstanding common shares in a deal valued at $9.1 billion, including assumed debt.
- The transaction involves a cash and equity exchange, with each Parkland share exchanged for 0.295 SUNCorp common units and CAD 19.80, totaling CAD 43.33 per share, a 25% premium based on the 7-day volume-weighted average prices as of May 2, 2025.
- The cash portion of $2.6 billion will be supported by a bridge facility and is expected to be permanently financed through senior notes and preferred equity.
- The acquisition is projected to be immediately accretive, generating at least 10% accretion to distributable cash flow per unit and $250 million in annual synergies within three years post-close.
- The combined entity will have an enterprise value of approximately $24.5 billion and aims to return to a 4x leverage ratio within 12 to 18 months after the deal closes.
- The transaction is subject to regulatory approvals and a Parkland shareholder vote, with an expected closing in the second half of 2025.
- The combined company will distribute over 15 billion gallons of fuel annually and will maintain a Canadian head office in Calgary.
- The refinery assets acquired from Parkland are expected to contribute about 5% of the 2024 pro forma EBITDA, with acquisition economics utilizing less than mid-cycle projections.
Sentiment
Score: 8
Explanation: The document conveys a positive outlook due to the strategic rationale of the acquisition, the expected synergies, and the potential for increased financial flexibility. Management expresses confidence in the deal's benefits for shareholders, employees, and consumers.
Positives
- The acquisition is immediately accretive and expected to generate at least 10% accretion to distributable cash flow per unit.
- The combined company will benefit from greater scale, diversification, and integration opportunities.
- Sunoco has a proven track record of managing expenses and delivering on synergies.
- The transaction creates significant financial flexibility, with the combined entity expected to generate more than 50% higher free cash flow than Sunoco as a stand-alone company in year 3.
- The creation of SUNCorp provides an investment option to support growth and attract a new investor base.
- Sunoco is committed to retaining a Canadian head office in Calgary and investing in Parkland's innovative low-carbon refinery.
Negatives
- The transaction is subject to regulatory approvals and a Parkland shareholder vote, which introduces uncertainty.
- Integration of the two companies could present challenges.
- Sunoco will need to manage a significant amount of assumed debt and return to its target leverage ratio.
- Potential adverse reactions or changes to business relationships could result from the announcement or completion of the proposed transaction.
Risks
- Failure to obtain regulatory approvals or Parkland shareholder approval could prevent the transaction from closing.
- The anticipated benefits and synergies of the transaction may not be realized or may take longer to achieve than expected.
- Integration of the two businesses could be more difficult or costly than anticipated.
- Changes in market conditions or the competitive landscape could impact the combined company's financial performance.
- Potential litigation relating to the proposed transaction could be instituted against Sunoco, Parkland or their directors.
- Rating agency actions could impact Sunoco and Parklands ability to access short-and long-term debt markets on a timely and affordable basis.
Future Outlook
The combined company is expected to be more stable, stronger financially, and better positioned for growth, with significant financial flexibility and the potential for increased free cash flow.
Management Comments
- Bob Espey: 'This combination with Sunoco provides Parklands shareholders with the highest value and the greatest proceeds.'
- Joe Kim: 'Over the short and long run, we believe that both sets of equity holders will win, our employees will win and the consumers will win.'
- Joe Kim: 'This transaction creates the largest independent fuel distributor in the Americas.'
- Scott Grischow: 'This was an elegant tax-efficient way to fund the equity consideration portion for the deal.'
Industry Context
This acquisition reflects a trend towards consolidation in the fuel distribution industry, with companies seeking greater scale and diversification to improve cost efficiencies and enhance their competitive position. The combined entity will be a major player in the North American and Caribbean markets, competing with other large fuel distributors and integrated oil companies.
Comparison to Industry Standards
- Valero and Phillips 66 are examples of large refining and marketing companies, but Sunoco aims to remain focused on fuel distribution rather than becoming a traditional R&M company.
- The NuStar transaction serves as a benchmark for Sunoco's ability to integrate acquisitions and achieve financial targets, with the company returning to its 4x leverage target within 6 months, faster than the initially projected 12-18 months.
- Peerless acquisition in Puerto Rico, where Sunoco doubled EBITDA in less than 3 years, demonstrates the potential for commercial synergies in the Caribbean market.
Stakeholder Impact
- Parkland shareholders will receive a 25% premium for their shares.
- Employees of both companies will have opportunities to contribute to a larger, stronger organization.
- Consumers are expected to benefit from a more stable and efficient fuel distribution network.
- The combined company will maintain a Canadian head office in Calgary, demonstrating a commitment to the Canadian economy.
Next Steps
- Obtain regulatory approvals for the transaction.
- Secure Parkland shareholder approval.
- Finalize financing arrangements for the cash portion of the deal.
- Integrate Parkland's operations into Sunoco's business.
- Realize the anticipated synergies and cost savings.
- Return to the 4x leverage target within 12-18 months post-close.
Key Dates
- May 2, 2025: Date used for calculating the 7-day volume-weighted average prices of Parkland and Sunoco shares for the premium calculation.
- May 5, 2025: Date of the conference call announcing Sunoco's acquisition of Parkland Corporation.
- Second half of 2025: Expected closing date of the acquisition, subject to regulatory approvals and Parkland shareholder vote.
Keywords
Sunoco, Parkland Corporation, acquisition, fuel distribution, synergies, SUNCorp, refinery, financial performance, merger
SUN
Sunoco Lp
NYSE
Sector: Energy
Filings with Classifications
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.
Capital raise
29 May 2025 7:00 AM
Merger Announcement
- Committed bridge financing is in place for the cash portion of the acquisition.
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.
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.
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).
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.
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.
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
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.
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
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.
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.
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.
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
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.