Sunoco Controlling Interest in the firm to Fund the Deal

Gold Silver Reports ~ Energy Transfer Equity (ETE) said on Wednesday that it has no plans to sell its controlling interest in Sunoco LP (SUN.N) even though it has received many queries from potential buyers since acquiring the gas station and convenience store operator in 2012.    

♦ That ETE, a pipeline company run by Dallas billionaire Kelcy Warren, had held talks about selling its controlling interest in Sunoco as well as a 36.4 percent stake in the group. Three people familiar with the matter had said the controlling interest could be worth as much as $2 billion.

♦ The discussions did not advance because of disagreements over Sunoco’s value, the people said. from ETE and Sunoco for comment for that story but they did not respond before publication.

♦ On Wednesday, ETE said in a statement that it had not had any such discussions.

♦ “Since acquiring the Sunoco assets, Energy Transfer has received many unsolicited calls from parties interested in purchasing the Sunoco assets. We have consistently responded that we have no interest in selling. We fully expect for Sunoco to continue to be a positive contributor to Energy Transfer,” ETE said.

♦ Robert Owens, the chief executive of Sunoco, said in a phone interview that he expects his group to be part of ETE for some time. ETE has a controlling interest in Sunoco referred to as the general partnership or GP, as well as a 36.4 percent stake in the firm.

♦ “There have been people who have mentioned to me – financial players – that they knew of folks that would be interested in the GP. My response has always been Energy Transfer has no interest in selling the GP,” Owens said.

♦ ETE is currently in the process of buying rival pipeline company Williams (WMB.N) but a sharp drop in oil prices means that the offer has dropped in value from $33 billion to over $14 billion and the cash portion of $6 billion now represents nearly half of the deal.

♦ Williams’ shares have often traded significantly below the deal price as a reflection of investor skepticism of ETE’s ability or willingness to close the deal.

♦ Owens said he was not worried about the additional debt ETE will have to take on as part of the Williams transaction and said he did not believe ETE needed to sell either its stake in Sunoco or its controlling interest in the firm to fund the deal.

♦ Sunoco has a market capitalization of around $3.5 billion.

♦ “I think the benefits of the Williams transaction are significant. I think that ETE has options available to it.”   ~  Neal Bhai Reports