Energy Transfer Partners, a Dallas-based energy and pipeline company, has bought Sunoco, the 126-year old Philadelphia oil company, for $5.3 billion, the Philadelphia Inquirer is reporting today.

Sunoco's 4,900 retail fuel outlets will continue to operate under the Sunoco brand, and its pipeline affiliate, Sunoco Logistics Partners, will maintain its headquarters in Philadelphia. Under the merger agreement Sunoco continues, as planned, to exit the refining business.

With Energy Transfer Partners, Sunoco will also continue to pursue a proposed refinery joint venture between Sunoco and The Carlyle Group, a private equity manager, that could continue to operate Sunoco's Philly refinery, the largest refinery on the east coast with 335,000 barrels per day capacity.

The uninterrupted operation of the Philadelphia refinery is essential for consumers in the northeast. Sunoco's Marcus Hook, PA refinery closed last year and is unlikely to reopen; and the Conoco Phillips refinery in Trainer, PA is also idled. Delta Airlines is in talks with ConocoPhillips to purchase that plant, but no deal has been reached. Together, these three refineries represent half of the refining capacity of the northeastern U.S.


The Inquirer says Energy Transfer Partners (ETP) has extensive energy assets that include pipeline operations in Alabama, Arizona, Arkansas, Colorado, Florida, Louisiana, Mississippi, New Mexico, Utah and West Virginia. ETP also owns and operates the largest interstate pipeline system in Texas.

The Sunoco pipeline assets complement ETP because they connect the Great Lakes and Northeast region to America's refining center along the Gulf Coast. ETP currently has natural gas operations that include approximately 23,500 miles of gathering and transportation pipelines; treating and processing facilities; and storage facilities in Texas. ETP also holds a 70 percent interest in Lone Star NGL, a joint venture that owns and operates natural gas liquids storage, processing and transportation assets in Texas Louisiana and Mississippi.

If a buyer for the Phila. refinery is not found by July, Sunoco would relinquish the refinery assets to ETP in exchange for a noncompeting minority interest in the joint venture but would have no ongoing capital obligations for the refinery. According the Inquirer, The Carlyle Group would contribute cash to the joint venture, hold the majority interest and oversee day-to-day refinery operations. To date, no refinery deal has been finalized.

USA TODAY says the boards of both companies have approved the deal. It's expected to close in the third or fourth quarter of this year. Regulators and shareholders must still sign off.