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Published: Fri, April 07, 2017
Economy | By Melissa Porter

Japanese retailer Seven & i to buy Sunoco assets for $3.3 billion

Japanese retailer Seven & i to buy Sunoco assets for $3.3 billion

Seven & I forecast operating profit will probably increase 6 percent to 386.5 billion yen ($3.5 billion) for the 12 months ending February 2018 from a year earlier, according to a statement Thursday. This supply agreement will have guaranteed annual payments to Sunoco, provides that 7-Eleven will continue to use the Sunoco brand at now branded Sunoco stores and includes committed growth in future periods. SUN's Aloha Petroleum business unit in Hawaii will continue to operate.

As part of the deal, the US company will also supply about 2.2 billion gallons of fuel annually for 15 years to a unit of the operator of 7-Eleven chain of convenience stores.

Sunoco, which had about $4.51 billion in long-tem debt as of December, said it expects to use proceeds from the sale to primarily to repay debt. "Likewise, the transaction does not include Sunoco's highly successful APlus franchisee-operated stores", the company said.

It's one of the largest purchases ever made by 7-Eleven and gets Sunoco, which said it wants to focus on being a gasoline supplier, out of the retail business. BlackRock Advisors LLC now owns 53,260 shares of the company's stock valued at $1,545,000 after buying an additional 190 shares in the last quarter. A new Stripes store in Corpus Christie has a dining area with 28 seats and an outdoor patio for 20 more, which is different from the traditional 2,500 square-foot 7-Eleven.

The company also believes it can add to its USA footprint at a "cheap" price relative to some of its prior acquisitions. The other stations are expected to be sold as part of a different deal. In addition, it has has retained JP Morgan to market the approximately 200 remaining convenience stores in North and West Texas, New Mexico and Oklahoma.

It's a flawless corporate match: Sunoco wants to focus on fuel and get out of the convenience store business, while 7-Eleven's parent company wants to expand in the United States.

Energy Transfer's chief financial officer, Thomas Long, said there are no plans to dissolve the partnership.

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