Creates One of the Largest and Most Diversified Energy Partnerships
in the U.S.
Expands ETP’s Geographic Footprint and Markedly Strengthens its
Presence in Crude Oil, NGLs and Refined Products Transportation,
Terminalling, and Logistics
Expected to be Immediately Accretive to Distributable Cash Flow of ETP
DALLAS & PHILADELPHIA--(BUSINESS WIRE)--Apr. 30, 2012--
Energy Transfer Partners, L.P.(NYSE: ETP) and Sunoco, Inc.(NYSE:
SUN) today announced that they have entered into a definitive merger
agreement whereby ETP will acquire Sunoco in a unit and cash transaction
valued at $50.13 per share, or a total consideration of approximately
$5.3 billion, based on ETP’s closing price on April 27, 2012. This
combination will create one of the largest and most diversified energy
partnerships in the country by expanding ETP’s geographic footprint and
strengthening its presence in the transportation, terminalling and
logistics of crude oil, NGLs and refined products.
The merger consideration, which consists of $25 in cash and 0.5245 of an
ETP common unit, or approximately 50 percent cash and 50 percent ETP
common units, represents a 29 percent premium to the 20-day average
closing price of Sunoco shares as of April 27, 2012. By acquiring
Sunoco, ETP will also own Sunoco’s general partner interest and the
incentive distribution rights (IDRs) in Sunoco Logistics Partners (NYSE:
SXL), as well as Sunoco’s 32.4 percent interest in Sunoco Logistics
Partners’ limited partner units and Sunoco’s branded retail business,
which generates additional stable cash flows from a portfolio of
approximately 4,900 retail locations in the U.S.
“This transaction, which will be immediately accretive, represents the
next step in Energy Transfer Partners’ transformation into a more
diversified enterprise with an integrated and expanded footprint,” said
Kelcy Warren, ETP’s chief executive officer and chairman of the board of
directors. “As we have said in the past year, our goal is to derive more
of our distributable cash flow from the transportation of heavier
hydrocarbons like crude oil, NGLs, and refined products. With this
transaction, we make a major move in that direction, bringing our cash
flow mix related to the combined enterprise’s pipeline businesses to
approximately 70 percent natural gas and 30 percent heavier
hydrocarbons. At the same time, we will enhance the size and scale of
the ETP platform by creating new service capabilities and entering new
geographic operating areas.”
“This transaction will enable Sunoco’s businesses to realize their full
potential by becoming an important part of a diversified leader in the
energy industry,” said Brian P. MacDonald, Sunoco’s president and chief
executive officer. “In addition, it delivers an attractive premium to
our shareholders, while enabling them to participate in the future
growth of the business. The combination with ETP provides substantial
future value-creation opportunities for Sunoco shareholders and ETP
unitholders alike.”
Commenting further, MacDonald said, “ETP recognizes that the steady,
ratable cash flows that our logistics and retail businesses generate are
backed by great assets, deep expertise, and the potential for future
growth. ETP has an interest in growing its Marcellus Shale-related
activity, and I am pleased that the combined enterprise will retain a
strong Pennsylvania presence.”
Other Transaction Details
Under the terms of the merger agreement, which has been unanimously
approved by the boards of directors of both companies, Sunoco
shareholders can elect to receive, for each Sunoco common share they
own, either $50.00 in cash, 1.0490 ETP common units or a combination of
$25.00 in cash and 0.5245 ETP common units. The aggregate cash paid and
common units issued will be capped so that the cash and common units
will each represent 50 percent of the aggregate consideration. The cash
elections and common unit elections will be subject to proration to
satisfy this cap. Upon closing, Sunoco shareholders are expected to own
approximately 20 percent of ETP common units. In addition, $965 million
of Sunoco’s existing notes will remain outstanding.
In conjunction with the transaction, Energy Transfer Equity, L.P. (NYSE:
ETE), the owner of Energy Transfer Partners’ general partner, has agreed
to relinquish its right to approximately $210 million of incentive
distributions from ETP that it would otherwise be entitled to receive
over 12 consecutive quarters following the closing of the transaction.
Sunoco’s logistics and retail businesses will continue to maintain
headquarters in the Philadelphia area consistent with their current
operating presence. In addition, under the merger agreement, Sunoco will
continue its plans for exiting its refining business as previously
announced, as well as continue its plans for the proposed refinery joint
venture being discussed by Sunoco and The Carlyle Group.
Combined Corporate Structure
The transaction has been approved by each company’s board of directors
and is expected to close in the third or fourth quarter of 2012, subject
to approval of Sunoco shareholders and customary regulatory approvals.
Following the closing, Sunoco and Sunoco Logistics Partners will operate
under the Energy Transfer Equity, L.P. umbrella of companies. By
acquiring Sunoco, ETP will own Sunoco’s general partner interest,
limited partner interest and the incentive distribution rights in Sunoco
Logistics Partners.
Sunoco Logistics Partners will continue to be traded on the NYSE as a
separate publicly traded MLP.
Advisors
Wells Fargo Securities, LLC acted as exclusive financial advisor to ETP,
while Latham & Watkins LLP, Bingham McCutchen LLP and Morris, Nichols
Arsht and Tunnell LLP acted as legal counsel.
Credit Suisse Securities (USA) LLC acted as exclusive financial advisor
to Sunoco and Wachtell, Lipton, Rosen & Katz acted as legal counsel.
Conference Call
ETP and Sunoco will host a conference call today at 8:30 a.m. EDT (7:30
a.m. CDT) to discuss the transaction details. The dial-in number for the
call is 888-390-0918 in the United States, or 415-228-4586 outside the
United States. The participant pass code is ETPSUN. The call will also
be available for replay on ETP’s and SUN’s websites for a limited time.
Energy Transfer Partners, L.P. (NYSE:ETP)
is a publicly traded partnership owning and operating a diversified
portfolio of energy assets. ETP has pipeline operations in Alabama,
Arizona, Arkansas, Colorado, Florida, Louisiana, Mississippi, New
Mexico, Utah and West Virginia and owns the largest intrastate pipeline
system in Texas. ETP currently has natural gas operations that include
approximately 23,500 miles of gathering and transportation pipelines,
treating and processing assets, and three storage facilities located in
Texas. ETP also holds a 70 percent interest in Lone Star NGL, a joint
venture that owns and operates NGL storage, fractionation and
transportation assets in Texas, Louisiana and Mississippi. ETP’s general
partner is owned by ETE. For more information, visit the Energy Transfer
Partners, L.P. website at www.energytransfer.com.
Energy Transfer Equity, L.P. (NYSE:ETE)
is a publicly traded partnership, which owns the general partner and 100
percent of the incentive distribution rights (IDRs) of Energy Transfer
Partners, L.P. (NYSE:ETP) and approximately 52.4 million ETP limited
partner units; and owns the general partner and 100 percent of the IDRs
of Regency Energy Partners LP (NYSE:RGP) and approximately 26.3 million
RGP limited partner units. ETE is also the parent of Southern Union
Company. The ETE family of companies owns approximately 45,000 miles of
natural gas and natural gas liquids pipelines. For more information,
visit the Energy Transfer Equity, L.P. web site at www.energytransfer.com.
Sunoco, Inc. (NYSE: SUN) is a leading logistics and retail
company. The company owns the general partner interest of Sunoco
Logistics Partners L.P., which consists of a two percent ownership
interest and incentive distribution rights, and owns a 32.4 percent
interest in the Partnership’s limited partner units. Sunoco Logistics
Partners L.P. is an owner and operator of complementary pipeline,
terminal and crude oil acquisition and marketing assets. Sunoco also has
a network of approximately 4,900 retail locations in 23 states.
Sunoco Logistics Partners L.P. (NYSE: SXL), headquartered in
Philadelphia, is a master limited partnership that owns and operates a
logistics business consisting of a geographically diverse portfolio of
complementary pipeline, terminalling and crude oil acquisition and
marketing assets. The Refined Products Pipelines consist of
approximately 2,500 miles of refined products pipelines located in the
northeast, midwest and southwest United States, and equity interests in
four refined products pipelines. The Crude Oil Pipelines consist of
approximately 5,400 miles of crude oil pipelines, located principally in
Oklahoma and Texas. The Terminal Facilities consist of approximately 42
million shell barrels of refined products and crude oil terminal
capacity (including approximately 22 million shell barrels of capacity
at the Nederland Terminal on the Gulf Coast of Texas and approximately 5
million shell barrels of capacity at the Eagle Point terminal on the
banks of the Delaware River in New Jersey). The Crude Oil Acquisition
and Marketing business involves the acquisition and marketing of crude
oil and is principally conducted in Oklahoma and Texas and consists of
approximately 190 crude oil transport trucks and approximately 120 crude
oil truck unloading facilities.
IMPORTANT ADDITIONAL INFORMATION WILL BE FILED WITH THE SEC
In connection with the proposed business combination transaction between
Energy Transfer Partners, L.P. (“ETP”) and Sunoco, Inc. (“Sunoco”), ETP
plans to file with the U.S. Securities and Exchange Commission (the
“SEC”) a registration statement on Form S-4 that will contain a proxy
statement/prospectus to be mailed to the Sunoco shareholders in
connection with the proposed transaction. THE REGISTRATION STATEMENT AND
THE PROXY STATEMENT/PROSPECTUS WILL CONTAIN IMPORTANT INFORMATION ABOUT
ETP, SUNOCO, THE PROPOSED TRANSACTION AND RELATED MATTERS. INVESTORS AND
SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND THE
PROXY/PROSPECTUS CAREFULLY WHEN THEY BECOME AVAILABLE. Investors and
security holders will be able to obtain free copies of the registration
statement and the proxy statement/prospectus and other documents filed
with the SEC by ETP and Sunoco through the web site maintained by the
SEC at www.sec.gov.
In addition, investors and security holders will be able to obtain free
copies of the registration statement and the proxy statement/prospectus
by phone, e-mail or written request by contacting the investor relations
department of ETP or Sunoco at the following:
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Energy Transfer Partners, L.P.
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Sunoco, Inc.
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3738 Oak Lawn Ave.
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1818 Market Street, Suite 1500
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Dallas, TX 75219
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Philadelphia, PA 19103
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Attention: Investor Relations
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Attention: Investor Relations
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Phone: (214) 981-0795
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Phone: (215) 977-6764
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E-mail: InvestorRelations@energytransfer.com
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E-mail: SunocoIR@sunocoinc.com
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PARTICIPANTS IN THE SOLICITATION
ETP and Sunoco, and their respective directors and executive officers,
may be deemed to be participants in the solicitation of proxies in
respect of the proposed transactions contemplated by the merger
agreement. Information regarding directors and executive officers of
ETP’s general partner is contained in ETP’s Form 10-K for the year ended
December 31, 2011, which has been filed with the SEC. Information
regarding Sunoco’s directors and executive officers is contained in
Sunoco’s definitive proxy statement dated March 16, 2012, which is filed
with the SEC. A more complete description will be available in the
registration statement and the proxy statement/prospectus.
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
Statements in this document regarding the proposed transaction between
ETP and Sunoco, the expected timetable for completing the proposed
transaction, future financial and operating results, benefits and
synergies of the proposed transaction, future opportunities for the
combined company, and any other statements about ETP, Energy Transfer
Equity, L.P. (“ETE”), Sunoco Logistics Partners, L.P. (“SXL”) or Sunoco
managements’ future expectations, beliefs, goals, plans or prospects
constitute forward looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Any statements that are not
statements of historical fact (including statements containing the words
“believes,” “plans,” “anticipates,” “expects,” estimates and similar
expressions) should also be considered to be forward looking statements.
There are a number of important factors that could cause actual results
or events to differ materially from those indicated by such forward
looking statements, including: the ability to consummate the proposed
transaction; the ability to obtain the requisite regulatory approvals,
Sunoco shareholder approval and the satisfaction of other conditions to
consummation of the transaction; the ability of ETP to successfully
integrate Sunoco’s operations and employees; the ability to realize
anticipated synergies and cost savings; the potential impact of
announcement of the transaction or consummation of the transaction on
relationships, including with employees, suppliers, customers and
competitors; the ability to achieve revenue growth; national,
international, regional and local economic, competitive and regulatory
conditions and developments; technological developments; capital and
credit markets conditions; inflation rates; interest rates; the
political and economic stability of oil producing nations; energy
markets, including changes in the price of certain commodities; weather
conditions; environmental conditions; business and regulatory or legal
decisions; the pace of deregulation of retail natural gas and
electricity and certain agricultural products; the timing and success of
business development efforts; terrorism; and the other factors described
in the Annual Reports on Form 10-K for the year ended December 31, 2011
filed with the SEC by ETP, ETE, SXL and Sunoco. ETP, ETE, SXL and Sunoco
disclaim any intention or obligation to update any forward looking
statements as a result of developments occurring after the date of this
document.
Photos/Multimedia Gallery Available: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=50257493&lang=en
Source: Sunoco, Inc. and Energy Transfer Partners, L.P.
For Energy Transfer Partners, L.P.
Investors:
Brent
Ratliff, 214-981-0700
or
Media:
Mark Palmer,
214-254-3790
or
Vicki Granado, 214-599-8785
or
For
Sunoco, Inc.
Investors:
Clare McGrory, 215-977-6764
or
Media:
Thomas
Golembeski, 215-977-6298