Sunoco Logistics Partners L.P. (SXL) –– a master limited partnership –– acquired controlling interest in a fuel transporter firm Inland Corporation. The purchase price of the deal was settled at $100 million.
Following this acquisition, Sunoco Logistics will hold an 83.8% economic interest along with 70% voting interest in Inland. The partnership financed the purchase with its revolving credit facilities.
Inland comprises an active 350-mile refined products pipeline and associated facilities in Ohio that caters to various refineries and terminal markets in the region.
Sunoco Logistics management remains highly upbeat about this acquisition and believes that Inland operations will boost the partnership’s refining business activities in the Midwest.
Philadelphia-based Sunoco Logistics acquires, owns, and operates a geographically diverse portfolio of refined products and crude oil pipelines and terminal facilities. As of December 31, 2010, Sunoco Inc. (SUN) owned 31% of the partnership’s interest, including a 2% general partner interest.
We believe that Sunoco Logistics exhibits strong growth visibility for the near term, given its low-risk and stable cash flow-generating energy infrastructure assets. The partnership also enjoys the benefits of a high-quality and diverse portfolio of midstream assets that generate stable and recurring revenues by way of long-term fee-based contracts.
However, the unpredictable economic scenario, low demand for refined products and cost overruns on expansion projects remain key areas of concern, in our view. Hence, we maintain our long-term Neutral rating on the stock.
Philadelphia-based Sunoco Logistics currently retains a Zacks #3 Rank (short-term Hold recommendation).
SUNOCO INC (SUN): Free Stock Analysis Report
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