* Plans to drop combined retail business into Susser unit
* Offers Susser shareholders $80.25 in cash, or 1.4506 units
* Susser Holdings, unit Susser Petroleum shares hit
(Adds analyst comment, conference call details)
By Swetha Gopinath and Kanika Sikka
April 28 Energy Transfer Partners LP,
owner of gasoline retailer Sunoco Inc, said it would buy Susser
Holdings Corp and create a separate retail company as
it focuses on its core pipeline business.
Energy Transfer, which owns and operates about 35,000 miles
of pipelines, said on Monday that it would buy Susser Holdings
in a cash-and-stock deal valued at $1.8 billion.
Energy Transfer said it would combine its retail outlets and
Susser's convenience stores, including Stripes, and transfer it
to a Susser unit to create a retail business after the deal
closes in the third quarter.
"The drop down will allow us to exit retail business and
focus on our core strength - that being moving hydrocarbons
through our pipes," Energy Transfer's Chief Financial Officer
Martin Salinas said on a conference call with analysts.
Demand for pipelines is growing in the United States as oil
and gas producers struggle to move burgeoning shale supplies.
The Susser Holdings unit, Susser Petroleum Partners LP
, distributes motor fuel to Stripes stores and other
retailers. Energy Transfer gets the general partner interest in
Susser Petroleum and 50.2 percent of its units under the deal.
Susser Holdings shareholders can opt to receive either
$80.25 in cash, or 1.4506 Energy Transfer common units, or a
combination of both, for each share held.
The cash offer represents a premium of 41 percent to Susser
stock's Friday's close.
Susser shares rose to a life-high of $80 in early trading.
Susser Petroleum shares rose 30 percent to $47.93, a life-high.
HIGHER NON-FUEL MARGINS
Stephens Inc analyst John Lawrence said the deal would make
Energy Transfer less dependant on fuel margins.
Sunoco, acquired by Energy Transfer for $5.35 billion in
2012, operates more than 5,000 stores, mostly on the East Coast.
Susser operates 630 convenience stores, including 575
Stripes stores, across Texas, New Mexico and Oklahoma.
About 370 of Susser's Stripes stores also offer
made-to-order Mexican food, mainly under its Laredo Taco brand.
Energy Transfer would look at bringing this brand to its
other stores, Sunoco Chief Executive Bob Owens said on the call.
"The new entity will be 50-50 fuel and non fuel, which we
believe creates a much stronger combined entity," Owens, who
will lead the combined business, said.
About 65 percent of Sunoco's gross profit comes from fuel,
compared to 35 percent for Susser.
Energy Transfer said the deal would immediately add to its
distributable cash flow.
Synergy opportunities are expected to exceed $70 million
annually, the company said.
Barclays and Credit Suisse were financial advisers to Energy
Transfer, while Vinson & Elkins acted as the legal counsel.
BofA Merrill Lynch was Susser's financial adviser and
Gibson, Dunn & Crutcher LLP the legal counsel.
Energy Transfer Partners' shares were down 2 percent at
$54.64 on the New York Stock Exchange.
Susser Holdings shares were up nearly 36 percent at $77.70,
while the Susser Petroleum stock was up nearly 21 percent at
$44.49 at 12:31 ET.
(Editing by Joyjeet Das and Sriraj Kalluvila)