(Reuters) -Sunoco said on Monday it would acquire fuels storage and pipeline operator NuStar Energy in a deal valued at about $7.3 billion including debt, as it tries to diversify its core business beyond distribution of motor fuels.
The equity portion of the deal comes up to $2.99 billion, and NuStar’s shareholders stand to receive 0.400 of a Sunoco share for each NuStar unit they hold, valuing Sunoco’s shares at $23.78. That represents a premium of 31.9% to NuStar’s last closing price.
The deal, which has been approved by the boards of both the companies, will give Sunoco access to NuStar’s transportation and storage facilities, including a portfolio of about 9,500 miles of pipeline and 63 terminals.
The companies have flagged cost savings of $150 million by the third year following closing of the deal, expected in the second quarter of 2024.
Shares of Sunoco were down 5% in premarket trading, while shares of NuStar were up 23%.
Earlier this month, Sunoco agreed to sell 204 convenience stores in West Texas, New Mexico and Oklahoma to 7-Eleven Inc for about $1 billion. It said it would also acquire liquid fuels terminals in Amsterdam in the Netherlands and Bantry Bay in Ireland from Zenith Energy.
Sunoco, a Dallas-based company, is an affiliate of U.S. pipeline operator Energy Transfer, which is controlled by billionaire Kelcy Warren.
(Reporting by Seher Dareen and Bhanvi Satija in Bengaluru; Editing by Shailesh Kuber)