LONDON, UK / ACCESSWIRE / November 23, 2016 / Active Wall St. blog coverage looks at the headline from Sunoco Logistics Partners L.P. (NYSE: SXL) and Energy Transfer Partners, L.P. (NYSE: ETP) as both companies announced on November 21st, 2016, a merger agreement, under which Sunoco Logistics Partners will acquire Energy Transfer Partners in a $21.3 billion unit for unit transaction. Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.

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Terms of Agreement

Under terms of the transaction, Energy Transfer Partners unit-holders will receive 1.5 common units of Sunoco Logistics Partners for each common unit of Energy Transfer Partners they own. Energy Transfer closed at $39.37 on November 18th, 2016; thus the deal would be at a 10% premium to the volume weighted average pricing of ETP's common units for the last 30 trading days immediately prior to the announcement of the transaction. The deal was approved by the boards of directors and conflicts committees of both companies and is expected to close in Q1 2017, subject to receipt of Energy Transfer Partners' unit-holders' approval and other customary closing conditions.

Merger Synergies

Sunoco Logistics Partners stated that the transaction is expected to be immediately accretive to Sunoco Logistics Partners' distributable cash flow per common unit and is also expected to allow the combined entity to be in position to achieve near-term distribution increases in the low double digits and a more than 1.0x distribution coverage ratio.

Sunoco Logistics Partners and Energy Transfer Partners believe that the combined partnerships will provide significant benefits for stakeholders with the merged entity having increased scale and diversification across multiple producing basins and will have greater opportunities to more closely integrate Sunoco Logistics Partners' natural gas liquids business with Energy Transfer Partners' natural gas gathering, processing, and transportation business. With this transaction, Sunoco Logistics Partners and Energy Transfer Partners expect to build upon their experience working together as partners in several joint ventures to pursue commercial opportunities and to achieve cost savings while enhancing the service capabilities for their customers. Sunoco Logistics Partners and Energy Transfer Partners expect that the transaction will allow for commercial synergies and costs savings in excess of $200 million annually by 2019.

The transaction is also expected to strengthen the balance sheet of the combined organization by utilizing cash distribution savings to reduce debt and to fund a portion of the growth capital expenditure programs of the two partnerships. Energy Transfer Partners and Sunoco Logistics Partners have spent approximately $15 billion in organic growth capital over the past several years, and these expenditures, combined with the completion of other major capital projects currently in progress, are expected to continue to generate strong distributable cash flow growth.

Both Energy Transfer Partners and Sunoco Logistics Partners' management teams are pleased to be able to bring two strong partnerships together in this strategic transaction that combines the premier crude oil midstream MLP with the premier natural gas midstream MLP. The combined partnership is expected to be the second largest MLP as measured by enterprise value.

At the closing of the transaction, the Chief Executive Officer, Chief Commercial Officer, President, and Chief Financial Officer of the combined partnership will be Kelcy Warren, Mackie McCrea, Matt Ramsey, and Tom Long, respectively. It is expected that Mike Hennigan and other members of the Sunoco Logistics Partners' management team will continue in leading management roles of the combined company with the Sunoco Logistics Partners business headquartered in Philadelphia.

Stock Performance

Sunoco Logistics Partners' share price finished yesterday's trading session at $23.77, falling 2.86%. A total volume of 7.39 million shares exchanged hands, which was higher than the 3 months average volume of 1.85 million shares. The stock is trading at a PE ratio of 47.35 and has a dividend yield of 8.58%. The company's shares currently have a market cap of $8.09 billion.

ETP's share price finished yesterday's trading session at $35.19, dropping 3.64%. A total volume of 11.68 million shares exchanged hands, which was higher than the 3 months average volume of 3.21 million shares. The stock has advanced 2.31% in the past six months. Furthermore, since the start of the year, shares of the company have gained 18.35%. The stock has a dividend yield of 11.99%. At the close of Tuesday's session, shares of the company have a market cap of $18.53 billion.

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SOURCE: Active Wall Street