What Does Sunoco Get in ETP Merger?

The $5.3 billion merger between Energy Transfer Partners, L.P. (NYSE:ETP) and Sunoco, Inc. (NYSE:SUN) is set to create a large and highly diversified energy conglomerate in the U.S. The merger will extend ETP’s geographical reach across the country, and significantly boosts its interests in crude oil, transportation of refined products, terminalling, logistics, and NGLs.

ETP will acquire Sunoco for approximately $5.3 billion paid to Sunoco shareholders, either $50.00 in cash per share, 1.0490 ETP common units per share, or a combination of $25.00 in cash and 0.5245 ETP common units for every Sunoco share. The transaction reflects a 29 percent premium over the 20-day moving average of Sunoco’s shares as of April 27. The merger has been approved by both companies’ boards.

“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.

Brian P. MacDonald, Sunoco’s president and chief executive officer, said, “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.”

“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,” he added.

The merger is expected to be completed by the third or fourth quarter of 2012, subject to shareholder and regulatory approvals.