Business Context and Reporting Period
This Form 8-K, filed on April 27, 2014, by Energy Transfer Equity, L.P. (ETE), reports the entry into a Material Definitive Agreement. On this date, Energy Transfer Partners, L.P. (ETP) and Susser Holdings Corporation (Susser) entered into an Agreement and Plan of Merger. The transaction involves ETP acquiring Susser, with Susser continuing as a wholly-owned subsidiary of ETP.
Key Financial Metrics and Transaction Terms
This filing details the terms of the proposed merger rather than historical financial performance metrics such as revenue or cash flow. Key financial terms include:
- Standard Merger Consideration: Each outstanding share of Susser common stock will be converted into the right to receive $40.125 in cash and 0.7253 of an ETP common unit.
- Alternative Elections: Susser shareholders may elect to receive either $80.25 in cash (Cash Election Consideration) or 1.4506 ETP common units (Unit Election Consideration) per share, subject to proration.
- Termination Fee: Susser may be required to pay ETP a termination fee of $68 million under certain circumstances, including the acceptance of an alternative transaction.
- IDR Subsidy: ETP GP will amend the ETP partnership agreement to provide for the relinquishment of $350 million in aggregate incentive distribution rights paid to ETE over the first forty fiscal quarters following the merger.
Material Changes and Agreements
The primary material change is the execution of the Merger Agreement and a concurrent Support Agreement. Key provisions include:
- Support Agreement: Sam L. Susser and a related trust, holding approximately 11% of Susser's outstanding common stock, agreed to vote in favor of the merger, elect the Unit Election Consideration, and not solicit competing proposals.
- Equity Awards: Outstanding Susser options, restricted stock units, and restricted shares will generally become fully vested and convert into cash or ETP units based on the closing price or exchange ratios defined in the agreement.
- Board Approvals: The boards of directors for ETP LLC, ETE, and Susser have approved the Merger Agreement. Susser's board has agreed to recommend the transaction to its shareholders.
Guidance, Outlook, and Risks
The filing contains forward-looking statements regarding the expected timetable, benefits, and synergies of the transaction. Completion of the merger is subject to customary conditions, including:
- Approval by Susser shareholders.
- Receipt of required regulatory approvals.
- Satisfaction of other conditions set forth in the Merger Agreement.
Risks identified include the ability to consummate the transaction, regulatory hurdles, integration challenges, and market conditions affecting the energy sector. The filing notes that a registration statement on Form S-4 containing a proxy statement/prospectus will be filed with the SEC, which will contain important additional information.
Investor Verification Checklist
- Verify the final approval status of the merger by Susser shareholders and regulatory bodies.
- Review the upcoming Form S-4 registration statement and proxy statement/prospectus for detailed financial data and risk factors.
- Confirm the specific proration mechanics for the Cash and Unit Election Considerations if shareholder elections exceed the aggregate limits.
- Monitor the status of the $350 million IDR Subsidy implementation in the ETP partnership agreement.
- Check for any competing acquisition proposals that might trigger the $68 million termination fee.