Sunoco LP Launches $1.5 Billion Preferred Units Offering to Finance Acquisitions and Corporate Initiatives, Analysts Predict 25.39% Upside.

Sunoco LP has launched a $1.5 billion private offering to finance acquisitions and corporate initiatives. Analysts' price targets suggest a 25.39% upside, while the GF Value estimate indicates a potential 28.52% downside risk. The company has received a consensus "Outperform" rating from six brokerage firms.

Sunoco LP, an energy infrastructure and fuel distribution master limited partnership, has priced a private offering of 1.5 million 7.875% Series A Fixed-Rate Reset Cumulative Redeemable Perpetual Preferred Units at $1,000 per unit, raising $1.5 billion in gross proceeds [1]. The net proceeds will be used to fund a portion of the cash consideration for Sunoco's acquisition of Parkland Corporation, temporarily reduce borrowings under a revolving credit facility, and pay interest and fees.

The offering is expected to settle on September 18, 2025, subject to customary closing conditions [1]. Sunoco LP announced the pricing of the offering on September 4, 2025. The company plans to use the net proceeds from this offering to fund part of the cash consideration for the acquisition of all of the issued and outstanding common shares of Parkland Corporation. The acquisition is expected to close on the Effective Date, along with the net proceeds from the previously announced private offering of senior notes due 2031 in an aggregate principal amount of $1 billion and senior notes due 2034 in an aggregate principal amount of $900 million [1].

The Series A Preferred Units will accrue distributions semi-annually on March 18 and September 18 each year beginning March 18, 2026. The distributions will be cumulative from and including the date of original issue to, but excluding, September 18, 2030, at a rate of 7.875% per annum of the stated liquidation preference of $1,000. On and after the First Reset Date, distributions will accumulate at a percentage of the $1,000 liquidation preference equal to an interest rate equal to the Five-Year U.S. Treasury Rate, plus a spread of 4.230% per annum [1]. The Series A Preferred Units are redeemable, in whole or in part, on one or more occasions, at Sunoco's option on or after the First Reset Date at a redemption price of $1,000 per Series A Preferred Unit, plus, in each case, an amount equal to all accumulated and unpaid distributions thereon to, but excluding, the date of redemption [1].

This offering of the Series A Preferred Units has not been registered under the Securities Act of 1933, as amended, or any state securities laws. Sunoco plans to offer and sell the Series A Preferred Units only to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act and to non-U.S. persons in transactions outside the United States pursuant to Regulation S under the Securities Act [1].

Analysts' price targets suggest a 25.39% upside, while the GF Value estimate indicates a potential 28.52% downside risk. The company has received a consensus "Outperform" rating from six brokerage firms [2].

Sunoco LP shares fell 1.21% in intraday trading, with the company announcing the pricing of an upsized private offering of 1.5 million 7.875% senior notes due 2031. This offering is part of a larger aggregate $1.9 billion offering, which may have caused investor concern about the company's financial health and future prospects [2].

References:
[1] https://www.ainvest.com/news/sunoco-lp-upsizes-preferred-equity-offering-1-5-billion-2509/
[2] https://www.ainvest.com/news/sunoco-lp-shares-fall-1-21-intraday-upsizing-private-offering-1-5-million-7-875-notes-2509/