Energy Transfer Partners Susses Out Retail Business With Susser Acquisition

The pipeline operator bulks up its petroleum retail business in the Southwest.

May 5, 2014 at 12:00PM

Spring July

Source: Stripes.

Having gained a large petroleum retail business with the acquisition of Sunoco two years ago as well as the MACS chain of convenience stores last year, pipeline operator Energy Transfer Partners (NYSE:ETP) is bulking up the business by taking over Susser Holdings' 630 Stripes convenience stores in a deal valued at $1.8 billion.

The retail segment has seen a lot of jockeying for position over the past year or so, and earlier this year Hess, which has been steadily transforming itself into a pure-play exploration and production company by selling off non-core assets, announced its intention to sell or spin off its own retail operations consisting of some 1,258 fuel and food outlets that make it the largest convenience store owner on the East Coast.

That puts it in direct competition with Energy Transfer Partners' Sunoco operations, which are primarily bunched up on the East Coast, but the Susser acquisition gives the pipeline operator the opportunity to expand into the southwest, pitting it against Alimentation Couche-Tardthe largest convenience store operator in Canada -- and, with 4,300 stores in the U.S., makes it second in size only to 7-Eleven. It operates more than 270 retail outlets in Texas, New Mexico, Oklahoma, and Colorado under the Couche-Tard, Mac's, and Circle K brands.  


Source: Wikimedia Commons.

The purchase does give ETP the ability to not only expand Sunoco's rather iconic brand name but also allows it to partner Susser's Stripes convenience stores into more retail establishments, making it a good pick up on both accounts. The Sunoco division earns about two-thirds of its profits from fuel while Susser generates more from its convenience stores. Earlier this year, Susser completed the acquisition of 47 convenience stores in South Texas when it took over the Sac-N-Pac chain, and ETP says its own acquisition is a bet on the Texas market as well.

Energy Transfer Partners expects the acquisition to generate immediate synergistic savings totaling $70 million from shared services, improved economies of scale, and IT and personnel costs. Additional enhancements will come from increased buying power heft, convenience merchandise purchases, and other procurement activities.

When the deal is completed ETP will drop down all its retail marketing facilities into Susser Petroleum Partners (NYSE:SUSP), the master limited partnership that currently facilitates the wholesale distribution of motor fuels, which ETP will control but not operate and will continue to be publicly traded. The ultimate goal is to create a stand-alone retail business that allows ETP exit the retail business and focus on its pipeline operations.


Source: Sunoco Logistics.

Energy Transfer Partners got into the retail side of things when it bought Sunoco, which it wanted for its 7,900 miles worth of crude oil and efined products pipelines and 42 million barrels of refined product and crude oil storage capacity at its terminals. Sunoco's pipelines connect the Great Lakes and various regions in the Northeast to the Gulf Coast. ETP was traditionally a Texas-based natural gas transfer company, but saw Sunoco's liquids business as a new profitable venture for it. Also what came along with the purchase was Sunoco Logistics, Sunoco's pipeline operator.

So the retail side of things were never part of its core focus and placing it into an MLP was always part of the game plan. By adding Susser to the mix, it allows Energy Transfer to fulfill that goal and focus once more on its pipeline operations that still account for the vast bulk of its revenues.

Adding the 600 or so retail stores to its existing network of 5,100 outlets is a solid combination for the master plan and the master limited partnership, but investors would do well to keep focused on Energy Transfer Partner's pipeline operations.

Three stock picks to ride America's energy bonanza
Record oil and natural gas production is revolutionizing the United States' energy position. Finding the right plays while historic amounts of capital expenditures are flooding the industry will pad your investment nest egg. For this reason, The Motley Fool is offering a look at three energy companies using a small IRS "loophole" to help line investor pockets. Learn this strategy, and the energy companies taking advantage, in our special report "The IRS Is Daring You To Make This Energy Investment." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free. 

Rich Duprey has no position in any stocks mentioned, and neither does The Motley Fool. 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 Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers