Energy Transfer Partners' (ETP) $5.3 billion purchase of Sunoco in 2012 never seemed like the perfect strategic fit. Energy Transfer Partners, which mainly operates natural gas pipelines, was buying nearly 5,000 gas stations as part of a deal under which it would also acquire 7,900 miles of crude oil and refined fuel pipelines and an interest in Sunoco Logistics Partners (NYSE: SXL). While the pipelines made sense, the gas stations did not. Energy Transfer Partners fixed that problem this week by acquiring even more gas stations. Here's why this deal actually makes a lot of sense.

Details on the deal
Energy Transfer Partners on Monday announced that it had signed a deal to buy Susser Holdings (NYSE: SUSS) for about $1.8 billion. The deal comes with 630 retail stores and an interest in Susser Petroleum Partners (NYSE: SUSP). The interest in Susser Petroleum Partners is the key to the deal, as that's the exit vehicle Energy Transfer Partners will use to slowly sell down its retail business.

The plan calls for Energy Transfer Partners to combine its retail business with Susser's and then slowly drop down all the retail assets to Susser Petroleum Partners, which will serve as the holding company for an expanded retail segment. Susser Petroleum Partners will be responsible for owning and operating the retail segment, while Energy Transfer Partners will concentrate on owning and operating its vast pipeline network. It's a fairly complex deal, which is illustrated on the following slide.

Source: Energy Transfer Partners Investor Presentation (Link opens a PDF).

What it means for Energy Transfer Partners
The deal really is less about bulking up its retail business as it is about positioning Energy Transfer Partners to grow its core business. The future retail drop-down transactions will generate a lot of cash for the company. which will improve its balance sheet and provide additional growth capital.

That capital will help the company fund the $2 billion in potential near-term growth projects it is developing. In addition, the company has a number of opportunities under evaluation, including liquefied natural gas and liquefied petroleum gas export opportunities. Needless to say, Energy Transfer Partners requires open access to capital in order to grow its core energy transportation business. The structure of this deal should provide Energy Transfer Partners with a steady stream of cash that can be redeployed into these new growth projects.

While a clean exit of the retail business would have been an easier way for the company to cash in on the Sunoco retail segment, there is a lot of merit to this plan. Increasing the scale of the business and then slowly selling it down to a controlled entity will enable Energy Transfer Partners to profit from an even stronger business. The company called the transaction "smart" because there's potential to create more value over time.

Investor takeaway
At first glance, the Susser deal, much like the original Sunoco deal, could be a bit of a head-scratcher. However, all the complexities aside, this does look like a smart deal for the company. If all goes according to plan, it should create more value over time.