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DALLAS - Sunoco LP (NYSE: SUN), currently valued at $57.2 billion and maintaining a robust 7.86% dividend yield according to InvestingPro data, and Parkland Corporation (TSX: PKI) have announced a definitive agreement for Sunoco to acquire all outstanding shares of Parkland in a transaction valued at approximately $9.1 billion, including assumed debt. The deal, expected to close in the second half of 2025, will see Parkland shareholders receive a combination of cash and equity in a new entity named SUNCorp, LLC.
Parkland shareholders will have the option to receive either 0.295 SUNCorp units and C$19.80 in cash or C$44.00 per share in cash or 0.536 SUNCorp units for each Parkland share, subject to proration. This represents a 25% premium based on the 7-day volume-weighted average prices of both companies as of May 2, 2025.
To facilitate the proposed cash consideration, Sunoco has secured a $2.65 billion bridge term loan. The transaction has received unanimous approval from both companies’ boards of directors and is contingent upon regulatory approvals, the listing of SUNCorp units on the New York Stock Exchange, and the approval of Parkland’s shareholders.
Sunoco plans to form SUNCorp to hold limited partnership units that are economically equivalent to Sunoco’s publicly-traded common units, with the new entity being treated as a corporation for tax purposes. For two years post-closing, SUNCorp unitholders will receive the same dividend equivalent as Sunoco unitholders.
The acquisition is expected to be immediately accretive, with over 10% accretion to distributable cash flow per common unit and $250 million in run-rate synergies by the third year. This aligns with Sunoco’s strong financial performance, as evidenced by its $14.36 billion in EBITDA and healthy P/E ratio of 13.45x. According to InvestingPro, which offers comprehensive analysis of 1,400+ US stocks, Sunoco maintains a GOOD Financial Health Score of 2.62, suggesting solid fundamentals for this strategic move. Sunoco anticipates returning to a 4x long-term leverage target within 12-18 months following the close of the transaction.
Sunoco has committed to maintaining a Canadian headquarters in Calgary and significant employment levels in Canada. The company will continue to invest in Parkland’s Burnaby Refinery, which produces low-carbon fuels, and support Parkland’s plan to expand Canadian transportation energy infrastructure.
The combined company’s expanded free cash flow is expected to provide additional resources for reinvestment in Canada, the Caribbean, and the United States. With Sunoco’s current annual revenue of $82.67 billion and strong dividend history, investors can access detailed financial metrics, growth projections, and expert analysis through InvestingPro’s comprehensive research reports. Sunoco and Parkland will hold a conference call today to discuss the transaction further.
Financial advisory services for Sunoco were provided by Barclays and RBC Capital Markets, with Goldman Sachs Canada Inc. and BofA Securities advising Parkland. This announcement is based on a press release statement and does not constitute an offer to sell or a solicitation of an offer to buy any securities.
In other recent news, Energy Transfer has seen several updates from financial analysts regarding its stock performance and future expectations. Mizuho Securities adjusted its price target for Energy Transfer to $22, down from $24, while maintaining an Outperform rating. This change comes as the company’s fiscal year 2025 adjusted EBITDA guidance fell short of expectations, alongside an increase in anticipated growth capital expenditures. Goldman Sachs, on the other hand, raised its price target for Energy Transfer to $20, citing a slight increase in EBITDA projections for 2025 and 2026, despite maintaining a Neutral stock rating. UBS maintained its Buy rating with a $24 price target, highlighting operational improvements and favorable weather conditions that boosted first-quarter earnings estimates. RBC Capital Markets also reaffirmed its Outperform rating with a $23 price target, emphasizing Energy Transfer’s growth potential due to its strategic asset positioning. Additionally, Sunoco LP, a company associated with Energy Transfer, announced a $1 billion senior notes offering, with plans to use the proceeds to repay existing debts.
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