So ETP is likely going to merge with sunoco this Friday, but what does this mean for ETP shareholders? Surprisingly there was little price action yesterday regarding this news, so I'm wondering what to expect this Friday. Thanks.
Sunoco shareholders apparently will receive some ETP units in the merger. Not sure if that is relevant to today's price move.
I'm very tempted to pick up more calls but I don't understand the effects of the merger so I'm waiting until next week.
This "news" has been out there for several months, since the merger was announced. So there was nothing new to move the price. If they get a good price for the retail side of the business, it may move up a dollar or two, but the only thing that will move the untis will be an increase in the distribution.
Well this was announced a long time ago so you can't really expect any huge price movement as of yesterday. ETP has been in a transitionary phase for some time now. They have sold off their propane segment to raise capital and focus on natural gas transportation. SUG was dropped down from ETE to ETP, along with the acquisition of SUN, will greatly increase ETPs pipeline network and ability serve more customers. It is believed the retail segment of SUN will be sold off elsewhere however there hasn't been any news on this just yet. The move was great, SUN generates additional cash flow and has low outstanding debt.
One thing to keep in mind though is that realizing the gains of this merger will take time. Case and point, look at the SUG purchase and the little effect it had years later. However ETP has been continuing to reposition itself to be a leader in NG transportation. I haven't looked up the date in which SUN becomes ETP but I do know that the poll results had an over subscription of people who wanted the cash and not shares of ETP. This is a good thing because less shares of ETP means less of a dilutive effect. The report did say however that since there it was oversubscribed a cash/share consideration is being applied. I'm long and am more than content collecting the 8% divvy but for you options guys or if you're just playing the divvy run you might want to look into when this exchange takes place because there could be some downward pressure from SUN holders selling their newly acquired shares of ETP
my thoughts anyways