Sunoco grows fuel distribution arm with $110M acquisition

Dive Brief:

Convenience and fuel retailer Sunoco LP has acquired 16 fuel terminals from Zenith Energy Ltd. for $110 million, according to Sunoco’s first-quarter earnings report.
The terminals are located across the East Coast and Midwest, and bring Sunoco’s total terminal count to 42, according to a company LinkedIn post. The deal officially closed on May 1.
The move is Sunoco’s second acquisition over the past year. Last October, Sunoco acquired terminal operator Peerless Oil & Chemicals, Inc. — which distributes fuel to over 100 locations in Puerto Rico and the Caribbean — for $70 million.

Dive Insight:

Having now spent around $180 million on acquisitions over the past year, Sunco’s leadership plans to continue seeking deals as the M&A market “looks good” for the company, President and CEO Joe Kim said during its earnings call Tuesday.

“We see opportunities. We see value plays,” Kim said. “We believe it’s still a buyers market, especially for companies that bring synergies to the table.”

The deal includes terminals in both new and existing markets for Sunoco. One region that the company is particularly excited about reaching is Selma, North Carolina, Karl Fails, chief operations officer, said during the earnings call. He noted that while Sunoco has “some” business in North Carolina, it would like to grow further there.

“The majority of these terminals overlay our existing footprint, providing synergies with our fuel distribution portfolio,” Fails said during the call. “The remaining terminals provide us with new market opportunities to expand our fuel distribution reach.”

Sunoco updated its 2023 financial guidance upon closing the deal. It now expects its 2023 adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) to reach between $865 million and $915 million, with operating expenses to be within the range of $540 and $550 million.

Dallas-based Sunoco distributes fuel to about 10,000 convenience stores, independent dealers, commercial customers and distributors located in more than 40 U.S. states and territories. Although Sunoco still operates some c-stores across the country, it sold most of its company-operated retail network to 7-Eleven in 2017 for over $3 billion.