Sunoco LP (NYSE:SUN) shares have popped around 9% in the pre-market the company announced that it has entered into a definitive agreement to divest the majority of its convenience stores to 7-Eleven for $3.3 billion in cash. In terms of specific assets being sold, Sunoco has agreed to sell around 1,100 convenience stores in 19 separate geographic regions and has also entered into a 15-year take-or-pay fuel supply agreement with a 7-Eleven subsidiary under which Sunoco will supply approximately 2.2 billion gallons of fuel annually. Sunoco will sell around 200 convenience stores presumably to another buyer in a separate process.
Sunoco LP (NYSE:SUN) is selling the assets to focus more on its fuel supply business and to further enhance the company’s leverage and credit profile (Sunoco will use the proceeds to pay indebtedness and for general partnership purposes). CEO Bob Owens said, ‘The sale of these retail assets to 7-Eleven is the beginning of an exciting evolution for SUN into a premier nationwide fuel supplier. Our supply agreement with 7-Eleven provides SUN with a predictable long-term income stream, and this transaction quickly allows SUN to improve its financial profile’.
What Does The Smart Money Sentiment Say?
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Overall, the smart money sentiment around Sunoco has been rather staid. Of the 742 elite funds we track, 10 funds owned $29.34 million of Sunoco LP (NYSE:SUN) and accounted for 1.00% of the float on December 31, versus 12 funds and $47.55 million respectively on September 30. In terms of specific fund activity, T Boone Pickens‘ Bp Capital inched up its holdings by 2% to 416,496 shares at the end of December, good for 3.51% of the fund’s 13F portfolio. Leighton Welch‘s Welch Capital Partners also initiated a new stake of 182,603 shares during the same time period.
The Bottom Line
Sunoco LP (NYSE:SUN) shares have popped after the company announced the divestiture of the majority of its convenience stores to 7-Eleven for $3.3 billion. For more reading, check out ‘11 Countries That Consume The Most Oil In the World‘.