Sunoco's Strategic Moves: $1B 7-Eleven Deal, European Terminals Acquisition, Growth Focus

Sunoco LP SUN disclosed a deal for selling 204 convenience stores to 7-Eleven for around $1 billion, including customary fuel and merchandise inventory adjustments. 

As part of the sale, Sunoco will also amend its existing take-or-pay fuel supply deal with 7-Eleven to incorporate additional fuel gross profit. 

The company will allow proceeds from the sale to materially reduce leverage to execute future growth opportunities while maintaining a strong balance sheet and multi-year distribution growth. 

The transaction is expected to close promptly upon receipt of regulatory approvals and satisfaction of customary closing conditions.

European Terminals Acquisition: Sunoco also announced its intention to acquire 100% of the equity interest in Zenith Energy Netherlands Amsterdam B.V., which includes liquid fuels terminals in Amsterdam, Netherlands and Bantry Bay, Ireland. 

The definitive deal will be executed, and the purchase price announced, after the completion of the appropriate Dutch works council consultation and information processes, which are currently underway. 

The buyout will offer supply optimization for SUN's existing East Coast business and continue SUN's focus on growing its portfolio of stable midstream income. 

The company expects this tuck-in acquisition to be accretive to unitholders in the first year of ownership and will be funded using amounts available under SUN's revolving credit facility. 

The transaction is expected to close in Q1 2024, subject to customary closing conditions. 

Outlook: Sunoco reaffirmed its FY24 EBITDA guidance of $975 million to $1 billion.

Price Action: SUN shares were up 1.7% at $59.05 at last check Thursday.

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