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Dallas-based pipeline company Energy Transfer Partners LP is buying Philadelphia-based Sunoco Inc. in a $5.3 billion deal.
Dallas-based pipeline company Energy Transfer Partners LP is buying Philadelphia-based Sunoco Inc. in a $5.3 billion deal, Dow Jones Newswires reported.
According to the Associated Press, acquiring Sunoco will help Energy Transfer develop from primarily a natural gas pipeline company into a company that also moves crude oil and refined petroleum products. With Sunoco, 70 percent of Energy Transfer’s pipeline business cash flow will come from natural gas, and 30 percent will come from crude oil and refined fuel.
As the natural gas pipeline business slows down, Energy Transfer has been looking to diversify, Chairman and CEO Kelcy Warren said, according to the AP. "We needed to be more involved in the movement of crude," he said in a conference call.
With the purchase, Energy Transfer gets 7,900 miles of crude oil and refined fuel pipelines from Sunoco Logistics master limited partnership, Dow Jones Newswires reported. It also acquires Sunoco's 4,900 gasoline stations. Those stations will keep the Sunoco name and its diamond-and-arrow logo, the AP reported.
Following news of the acquisition, Standard & Poor's Ratings Services said it was raising its outlook for Energy Transfer to stable from negative, Dow Jones Newswires reported. S&P rates the company a triple-B-minus.
The deal, which still requires approval from regulators and shareholders, is expected to close in the third or fourth quarter of this year, the AP reported.
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