DALLAS - Sunoco LP (NYSE:SUN) has finalized the acquisition of NuStar Energy L.P., as confirmed by the company today. The deal, which was approved by NuStar's unitholders on May 1, 2024, resulted in the cessation of NuStar's common units trading on the New York Stock Exchange as markets opened today.
The transaction is expected to bolster Sunoco's financial stability and credit standing, while also providing a foundation for growth. Sunoco anticipates achieving at least $150 million in expense and commercial synergies from the merger.
Moreover, the company projects an additional annual cash flow increase of $50 million due to refinancing activities. The acquisition is believed to be immediately beneficial to Sunoco's distributable cash flow per limited partnership (LP) unit, with an anticipated accretion of over 10% by the third year post-closure.
In tandem with the acquisition news, Sunoco also declared a 4% increase in its quarterly distribution to $0.8756 per common unit, amounting to an annualized distribution of $3.5024. This distribution, which marks an increase from the previous year's 2% hike, is slated for payment on May 20, 2024, to common unitholders on record as of May 13, 2024. This group includes former NuStar unitholders who have received Sunoco common units following the merger.
Sunoco has scheduled a conference call on May 8, 2024, to discuss further details regarding the NuStar acquisition and the implications of the increased distribution.
Sunoco LP operates a broad network of pipeline and terminal facilities across the United States, Puerto Rico, Europe, and Mexico, supporting its extensive fuel distribution operations. The company's general partner is owned by Energy Transfer LP (NYSE:ET).
The information reported is based on a press release statement by Sunoco LP.
InvestingPro Insights
As Sunoco LP (NYSE:SUN) integrates the acquisition of NuStar Energy L.P., its financial metrics and market performance provide valuable insights into the company's current standing. With a market cap of approximately $4.67 billion, Sunoco showcases a substantial presence in the energy sector. The company's price-to-earnings (P/E) ratio, standing at 14.84, aligns with industry standards, indicating a balanced valuation relative to earnings. Adjusting for the last twelve months as of Q4 2023, the P/E ratio slightly increases to 15.25.
Investors monitoring dividend returns will find Sunoco's dividend yield of 6.09% particularly compelling, especially considering the recent 4% increase in its quarterly distribution. This is coupled with a positive dividend growth of 2.0% over the last twelve months as of Q4 2023. These figures suggest a reliable income stream for investors, which could be further bolstered by the projected cash flow increases post-acquisition.
For those looking for more in-depth analysis, InvestingPro Tips reveal that Sunoco's revenue has experienced a contraction, with a -10.34% change over the last twelve months as of Q4 2023. Such data is crucial for investors to consider the company's growth trajectory in light of the recent acquisition. Additionally, InvestingPro offers 5 more tips on Sunoco LP for investors seeking a comprehensive understanding of the company's financial health and prospects.
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