Yesterday, oil refiner and marketer Sunoco Inc. (SUN) announced the sale of certain assets of its U.S. retail heating oil and propane distribution business to specialty chemicals supplier Superior Plus Corp. Canada-based Superior has agreed to pay $82.5 million in cash for the transaction, which is expected to close on September 30, subject to regulatory and other approvals.
The business to be sold – Sunoco Retail Heat – supplies a wide variety of liquid fuels and propane gas to Pennsylvania and New York markets. The segment also has a network of two pipeline-supplied fuel terminals and 22 retail bulk plants that provide up to 20 million gallons of storage capacity in its core markets.
Based upon 2008 volumes, Sunoco Retail Heat’s fuel distribution mix consists of about 81% distillates (mainly heating oil and diesel fuel), 15% gasoline, and 4% propane, while the customer base is comprised of 88% residential and 12% commercial clients.
The proposed sale is part of Sunoco’s efforts to realign its portfolio and improve the company’s performance and competitiveness in a cost-effective manner, as it struggles to cope with the bearish refining margin environment.
We currently rate Sunoco shares as Underperform.
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