Hartree Partners Set to Acquire Sprague Resources for $500M

Global energy and commodities firm Hartree Partners, LP will acquire energy company Sprague Resources LP (NYSE: SRLP) in a deal that will take Sprague private.

According to the June 2 deal, Hartree will acquire Sprague for $500 million cash. As noted in the filings, each common units holder will receive $19 per common unit owned, which is a 27.3% premium to the closing price of the stock on January 10, 2022. This is also an 18.9% premium to the closing price as of June 1, 2022.

An affiliate of Hartree owns approximately 74.5% of the outstanding common units. As a result, Hartree is set to acquire the outstanding common units of Sprague that Hartree and its affiliates do not currently own. This follows a $16.50/unit offer made on January 11 of this year.

Sprague’s Board of Directors approved the agreement. The transaction also received approval by the holders of a majority of Sprague’s outstanding common units, which is required by Sprague’s partnership agreement.

The reverse triangular merger is set to close before the end of Q3 2022, subject to customary closing conditions. Upon which, Sprague will be a wholly owned subsidiary of Hartree and Sprague’s common units will not be publicly traded.

Latham & Watkins LLP served as legal advisor and Jeffries LLC served as financial advisor to Sprague. Vinson & Elkins LLP served as legal advisor and Evercore served as financial advisor to Hartree.

Prior to the announcement, Sprague’s stock was valued at $15.98 on June 1. When it was announced on June 2, the stock closed at $15.83. Meanwhile, a few days later on June 7, the stock closed at $19.00.

According to Hartree, its asset investments include storage and terminals; power generation; renewable assets; shipping, logistics and distribution; downstream and refining. For example, in 2019 Hartree acquired Cardinal Gas Storage and in 2021 acquired two more facilities. A Hartree affiliate owns a portfolio of crude oil tankers and in 2020 Hartree acquired 3 million barrels of crude oil storage. Meanwhile, in 2021, Hartree acquired a controlling interest in Sprague. The proposed acquisition expands Hartree’s control and ownership of Sprague, while adding to Hartree’s portfolio.