Sunoco LP (NYSE:SUN) stock was up on Thursday following news of a deal with 7-Eleven.
Sunoco LP is planning to sell the majority of its retail locations to 7-Eleven. The deal will also include its a 15-year take-or-pay fuel supply agreement. This will have SUN supply the gas stations with 2.2 billion gallons of fuel each year. The transaction has a value of $3.3 billion.
The fuel supply agreement also requires that 7-Eleven keeps Sunoco LP branding at retail locations that are already using it. The deal will have 7-Eleven acquiring 1,110 convenience stores from SUN. These stores will be mostly located along the East Coast and in Texas.
Sunoco LP says that once the deal is complete, it will shift its focus toward its fuel supply business. It will also still keep its APlus franchise stores and its Aloha Petroleum business unit in Hawaii.
Sunoco LP notes that it will use the $3.3 billion from this transaction to help pay down its own debts. It also says that it will use the money to grow its profile and form stronger connections with partners.
“Our supply agreement with 7-Eleven provides SUN with a predictable long-term income stream, and this transaction quickly allows SUN to improve its financial profile,” Bob Owens, President and CEO of Sunoco LP, said in a statement.
Sunoco LP says that it will still need to complete customary closing conditions before it can close the deal. This includes getting approval from regulators. So long as it doesn’t run into any trouble, SUN expects the deal to close by the fourth quarter of the year.
SUN stock was up 13% as of noon Thursday.