Sunoco LP announced Thursday it was selling 1.110 of its convenience stores to Seven & I Holdings based in Japan for $3.3 billion due to the company, based in Texas, shifting focus to its business of fuel supply.
Shares of Sunoco were higher by up to 24% on Thursday representing their biggest percentage increase intra-day in the past three years.
As part of this deal, Sunoco will supply nearly 2.2 billion gallons of fuel each year for the next 15 years to one of the units of the 7-Eleven convenience store chain operator.
Sunoco, a partnership traded publicly controlled by Energy Transfer Equity a pipeline operator, operators close to 1,350 retail fuel service sites as well as convenience stores under such brands as Stripes and APlus, showed the official website of the company.
The company announced that it planned to sell 200 other stores before the end of its fourth quarter and would expand its business of distribution in part through acquisitions.
The CFO of Energy Transfer Thomas Long said the company did not have plans to dissolve its partnership.
Energy Transfer said it wants Sunoco to stay as a standalone company and to continue on the mergers and acquisitions front to grow its business, said Long.
Sunoco announced that it expected to use proceeds from its sale to pay debt, which as of the end of 2016 was over $4.5 billion.
Seven & i Holdings has aggressively expanded in both Japan and the U.S. where it had acquired stores from different local retailers.
The latest purchase is at a time when operators of traditional retail big box stores including Seven & i, have suffered from weak sales due to changing tastes and modest growth in wages that prompts shoppers to move to less expensive specialty chains as well as online outlets.
The convenience store industry in the U.S. has growth momentum said Ryuichi Isaka the president of Seven & i, which operates specialty, department and merchandise stores, but its bulk of operating profit is generated from its convenience stores.
This deal would represent the largest by the Japanese company’s unit in the U.S.
Seven & i had approximately 19,400 7-Eleven locations across Japan and more than 8,700 in the U.S. and Canada, which includes those operated by franchisees.