8-KMaterial AgreementsExhibits & Filings

Energy Transfer LP 8-K Report, Material Agreement (May 1, 2012)

Filed May 1, 2012For Securities:ETET-PI

Summary

This 8-K filing by Energy Transfer Equity, L.P. (ETE) on April 30, 2012, announces a material definitive agreement for the merger of Energy Transfer Partners, L.P. (ETP) with Sunoco, Inc. (Sunoco). The transaction, expected to close following shareholder and regulatory approvals, involves ETP acquiring Sunoco in a cash and unit transaction. Sunoco shareholders can elect to receive $25 cash and 0.5245 ETP units per share, or opt for an all-cash consideration of $50 per share or all ETP units equivalent to $50 per share, subject to proration. This merger represents a significant strategic move for Energy Transfer, aiming to integrate Sunoco's assets and operations into its existing midstream infrastructure. The filing also details the treatment of Sunoco's equity awards, which will be cashed out. Importantly, as part of the transaction, ETP GP (ETP's general partner) will amend its partnership agreement to relinquish approximately $210 million in incentive distribution rights (IDRs) owed to ETE over the first twelve fiscal quarters post-merger. This IDR subsidy is a key element designed to align interests and enhance the economics of the combined entity for ETP unitholders.

Key Highlights

  • 1Energy Transfer Partners, L.P. (ETP) to acquire Sunoco, Inc. (Sunoco) in a merger transaction.
  • 2Sunoco shareholders will receive a mix of cash and ETP common units, or an all-cash or all-unit alternative, subject to proration.
  • 3Each Sunoco share will be converted into $25.00 cash and 0.5245 ETP common units, or shareholders can elect for $50.00 cash or 1.0490 ETP units per share.
  • 4Sunoco stock options and restricted stock units will be cashed out, generally at a value of $50.00 per share.
  • 5ETP GP will relinquish approximately $210 million in incentive distribution rights (IDRs) owed to ETE over the first twelve fiscal quarters post-merger.
  • 6The transaction is subject to customary closing conditions, including Sunoco shareholder approval and regulatory approvals.
  • 7Sunoco has agreed to a 'no-shop' provision, limiting its ability to solicit alternative acquisition proposals.

Frequently Asked Questions

This 8-K filing announces the execution of a Material Definitive Agreement, specifically an Agreement and Plan of Merger, between Energy Transfer Partners, L.P. (ETP) and Sunoco, Inc. (Sunoco). It details the terms of the proposed acquisition of Sunoco by ETP.

Sunoco shareholders have options. The standard consideration is $25.00 in cash and 0.5245 ETP common units per share. Alternatively, they can elect to receive $50.00 in cash per share or 1.0490 ETP common units per share, subject to proration to maintain the overall cash and unit mix of the transaction.

The 'IDR subsidy' refers to ETP GP agreeing to relinquish approximately $210 million of incentive distribution rights (IDRs) that would otherwise be paid to Energy Transfer Equity, L.P. (ETE) over the first twelve fiscal quarters following the merger. This is important for investors as it reduces the amount of cash flow ETE receives from ETP, potentially benefiting ETP unitholders by improving ETP's distributable cash flow available for other purposes.

The completion of the merger is contingent upon several customary conditions, including the approval of the merger agreement by Sunoco shareholders and the receipt of all necessary regulatory approvals.