Sunoco Logistics Partners L.P. (SXL) and Energy Transfer Partners, L.P. (ETP) have entered into a merger agreement for the acquisition of ETP by SXL in a unit-for-unit transaction. The boards of directors and conflicts committees of both partnerships have approved the transaction, which is now expected to close in 1Q17. Completion is subject to the receipt of ETP unitholder approval and other customary closing conditions.
Under the terms of the transaction, ETP unitholders will receive 1.5 common units of SXL for each common unit they own of ETP. This equates to a 10% premium to the volume weighted average pricing of ETP’s common units for the last 30 trading days immediately prior to the announcement of the transaction.
As part of this transaction, Energy Transfer Equity (ETE) has agreed to continue to provide all of the incentive distribution right subsidies that are currently in effect with respect to both partnerships.
The transaction is expected to be immediately accretive to SXL’s distributable cash flow per common unit and is also expected to allow the combined partnership to be in position to achieve near term distribution increases in the low double digits and a more than 1.0x distribution coverage ratio.
The transaction is expected to provide significant benefits for both SXL and ETP unitholders as the combined partnership will have increased scale and diversification across multiple producing basins and will have greater opportunities to more closely integrate SXL’s natural gas liquids business with ETP’s natural gas gathering, processing and transportation business. It is predicted that the transaction will allow for commercial synergies and costs savings in excess of US$200 million annually by 2019.
At the closing of the transaction, the CEO, CCO, President and CFO of the combined partnership will be Kelcy Warren, Mackie McCrea, Matt Ramsey and Tom Long, respectively. It is expected that Mike Hennigan and other members of the SXL management team will continue in management roles of the combined company.
Read the article online at: https://www.worldpipelines.com/business-news/22112016/sunoco-logistics-to-acquire-energy-transfer-partners/