Why Sunoco Shares Soared

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of oil and gas refiner Sunoco (NYSE: SUN  ) surged 19% on Monday after pipeline operator Energy Transfer Partners (NYSE: ETP  ) announced it will acquire the company for about $5.3 billion.

So what: The deal values Sunoco at $50.13 per share and represents a juicy 23% premium to its closing price on Friday. Energy Transfer is making the move primarily to diversify into oil pipelines in response to the prolonged natural gas slump, and judging by its own stock's 3.5% rally, Wall Street seems pleased with the strategy.   

Now what: The deal is expected to close in the third or fourth quarter -- pending shareholder and regulatory approval -- and should contribute to Energy Transfer's earnings right away. "This transaction, which will be immediately accretive, represents the next step in Energy Transfer Partners' transformation into a more diversified enterprise with an integrated and expanded footprint," said Energy Transfer Chairman and CEO Kelcy Warren. So while Sunoco shares might be all popped out, Energy Transfer remains a five-star stock worth checking out. 

Interested in more info on Sunoco? Add it to your watchlist.

Interested in more info on Energy Transfer? Add it to your watchlist.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.


Read/Post Comments (0) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 1874974, ~/Articles/ArticleHandler.aspx, 7/31/2014 4:36:11 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement