The U.S. refining industry is probably reaching its nadir. Pipeline major Energy Transfer Partners
Cutting the flab?
Simply put, the refining segment hadn't been worth the money. The final nail in the coffin came last September, when the company announced that it would exit its refining business altogether. Sunoco had initiated a plan to sell its two remaining refineries in Pennsylvania. Before that, Sunoco sold off its Toledo refinery for $1 billion in March 2011, its Tulsa refinery to Holly -- now a part of HollyFrontier
It wasn't just the refining segment that Sunoco was looking to dispose off. Last year, the company exited its chemical business by selling its last remaining facilities, in Philadelphia and Ohio. In 2010, Sunoco had already sold off its polypropylene chemicals business, which had facilities in Texas, Wyoming, and Pennsylvania.
So what exactly was ETP eyeing? It's the logistics business, through Sunoco's 32.4% interest in Sunoco Logistics Partners
In terms of competition, the consolidation should bring ETP into more even terms with current pipeline leader Kinder Morgan Energy Partners
Foolish take away
Sunoco's shareholders have a good deal here. With the transaction valued at $50.13 per share, it's a 22.5% premium over its current price. While it remains to be seen to what extent the latest acquisition will benefit ETP, there's no doubt the storage and transportation industry is at a critical stage. The more powerful players will want to consolidate their position and muscle out the weaker ones. Meanwhile, you can keep abreast of the situation by adding Energy Transfer Partners to your free, personalized Watchlist.
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Fool contributor Isac Simon owns no shares of any of the companies mentioned in this article. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.