The move aimed to diversify and expand its motor fuel distribution business across the United States. The all-stock transaction, including assumed debt, was approved by the boards of both companies and is expected to close in the second quarter of 2024. Sunoco said it paid a 24% premium for NuStar shares compared to a 30-day average.

In premarket trading, Sunoco shares fell more than 9%, while NuStar surged about 12%. Analysts see the deal as a strategic move by Sunoco to gain control of crucial infrastructure in its supply chain, including NuStar's network of over 15,200 kilometers of pipelines and 63 terminal and storage facilities.

Sunoco currently distributes motor fuel to roughly 10,000 convenience stores, independent dealers, commercial customers, and distributors across more than 40 states.

NuStar operates as a separate pipeline operator, specializing in transporting and storing various liquids, including crude oil, refined products, and renewable fuels.

The acquisition follows a wave of consolidation in the oil and gas sector. In November, Chesapeake Energy and Southwestern Energy announced a $7.4 billion merger. In October, Exxon Mobil, Chevron, and Australia's Woodside Petroleum unveiled megadeals to strengthen their respective positions in the global market.

With this deal, Sunoco aims to enhance its competitiveness and profitability in the U.S. fuel distribution market by gaining greater control over its supply chain and leveraging NuStar's extensive infrastructure. However, questions remain about potential cost synergies and long-term integration challenges amidst a volatile energy landscape.