Michael Fitzsimmons • 16 Comments
Tue, Nov. 22, 3:18 PM
- Energy Transfer Partners (ETP -3%) and Sunoco Logistics Partners (SXL -2.7%) are lower for a second straight session following yesterday's unit-for-unit merger deal (I, II), while Enbridge Energy Partners (EEP +2.8%) rises for a third consecutive day.
- Stifel downgrades ETP to Hold from Buy with a $37 price target, trimmed from $48, as the firm sees little upside at current valuations given that units now effectively track movements in the price of SXL, which the firm reiterates at Hold with a $24 target, cut from $29.
- Tudor Pickering says it would be buyers of SXL “despite investor fears of a forced SXL takeout bid materializing,” and adds that the deal cuts yield for ETP unitholders in exchange for no premium takeout, while SXL owners “have their asset base diluted to shore up ETP’s unsustainable payout."
Mon, Nov. 21, 3:18 PM
- Both Sunoco Logistics Partners (SXL -7.8%) and Energy Transfer Partners (ETP -7.9%) trade sharply lower on news of the plan for the much smaller SXL to purchase ETP that will result in a net implicit reduction in distribution yield for ETP unitholders.
- ETP investors will receive 1.5 units of SXL for each unit of ETP they own but their payouts will be reduced since SXL has a much lower dividend yield; CreditSights says the merger amounts to a “stealth distribution cut” that reduces the ETP cash payout by 29%.
- Bernstein Research notes CEO Kelcy Warren chose a path that protects Energy Transfer Equity (ETE +2.8%), the entity in the group of companies in which he holds more than 10% of shares outstanding.
- But analysts generally are pleased that the deal - if it is approved by unitholders - will simplify ETE's complex structure, which also includes Sunoco LP (SUN -3.6%) and PennTex Midstream Partners (PTXP +0.8%); Baird analyst Ethan Bellamy calls the deal "a major step in untangling... the most complex web of publicly traded partnerships."
- Seaport Global's Sunil Sibal calculates that the deal will lead to a distribution reduction of ~$1.22 per ETP unit, or $650M, but could turn out well in the long run, lowering the cost of capital through the Energy Transfer complex and positioning it for acquisitions as the industry continues to consolidate.
Mon, Nov. 21, 9:42 AM
- Sunoco Logistics Partners (SXL -1.6%) agrees to acquire Energy Transfer Partners (ETP -1%) in a unit-for-unit transaction.
- ETP unitholders will receive 1.5 common units of SXL for each common unit of ETP they own, which equates to a 10% premium to the volume weighted average pricing of ETP’s common units for the last 30 trading days.
- The companies say the combined partnership will offer increased scale and diversification across multiple producing basins and have greater opportunities to more closely integrate SXL's natural gas liquids business with ETP's natural gas gathering, processing and transportation business; the companies also anticipate more than $200M/year in commercial synergies and costs savings by 2019.
- Kelcy Warren, Chairman of parent company Energy Transfer Equity (ETE +10%), will be CEO of the combined company; ETE will continue to provide all incentive distribution right subsidies that are currently in effect for both partnerships.
Mon, Sep. 26, 4:53 PM
- Sunoco Logistics Partners (NYSE:SXL) -3.3% AH after agreeing to acquire Vitol's Permian Basin crude oil unit for $760M plus working capital.
- SXL says the acquisition will provide a ~2M-barrel crude oil terminal in Midland, Tex., a crude oil gathering and mainline pipeline system in the Midland Basin, including a significant acreage dedication, and crude oil inventories related to Vitol’s crude oil purchasing and marketing business in west Texas.
- In connection with the deal, Energy Transfer Partners (NYSE:ETP) and Energy Transfer Equity (NYSE:ETE), as the owners of SXL general partner Sunoco Partners, will reduce incentive distributions by $60M over a two-year period.
- To help fund the deal, SXL announces a 21M-unit public offering, with an underwriters option to purchase up to 3.15M additional common units.
Apr. 30, 2012, 3:12 PM
Sunoco (SUN +19.6%) continues to lead all S&P gainers after its acquisition by Energy Transfer Partners (ETP +2.9%). ETP is most enamored with SUN's stakes in Sunoco Logistics (SXL -1.3%) and its network of refined product pipelines, terminals and trucks; ETP is paying plenty for the general partner interest in SXL, but it's a bargain vs. KMI's recent deal for EP.| Apr. 30, 2012, 3:12 PM