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Sunoco Inc (SUN) said Thursday it will sell its Toledo, Ohio, refinery to PBF Holding Company LLC for $400 million.

The acquisition, scheduled for completion in the first quarter of 2011, would mark a further expansion of PBF's U.S. refining portfolio at a time of struggle for the industry. PBF, led by refining industry veteran Thomas O'Malley and funded by European refiner Petroplus Holdings AG (PPHN.VX), The Blackstone Group (BX) and First Reserve Corp., has already bought one East Coast refinery and is in talks to buy another from San Antonio-based Valero Energy Corp. (VLO).

U.S. refiners have been beset by reduced demand after the recent recession and excess production capacity built during the commodities bubble of late 2008. With higher fuel emissions standards and alternative fuels making inroads into their markets, most refiners are struggling to keep healthy margins.

"Selling the Toledo refinery will enable us to direct resources and management focus toward growing the logistics and retail businesses where we have competitive advantages, as well as generate cash and strengthen our balance sheet," Sunoco Chief Executive Lynn Elsenhans said in a prepared statement.

Sunoco will receive $200 million in cash and $200 million in a promissory note from PBF. In addition, the purchase agreement included a payment of up to $125 million based on the future profitability of the refinery.

The Toledo refinery employs about 600 people and can turn about 170,000 barrels a day of crude oil into gasoline, diesel fuel, kerosene, propane, residual fuels and petrochemicals, according to the company's website.

PBF, which started as a $2 billion fund in 2008, in June completed its acquisition of Valero's 182,000 barrel-a-day Delaware City, Delaware, refinery and terminal assets for $220 million. PBF is also in talks to buy Valero's 160,000 barrel-a-day Paulsboro refinery in New Jersey for $180 million in cash and a note for an additional $180 million within 18 months of the deal closing.

Sunoco also announced that it may extend its target date for selling its SunCoke Energy segment. Sunoco originally expected to sell SunCoke, which turns waste crude oil into petrochemical feedstocks, in the first half of 2011. The deadline "may be extended" pending the conclusion of a lawsuit with ArcelorMittal (MT, MT.AE) concerning coke pricing, Sunoco said. SunCoke and ArcelorMittal have had discussions on resolving the matter, which is scheduled to come to trial in May, according to Sunoco.

-By Ben Lefebvre, Dow Jones Newswires; 713-547-9201; ben.lefebvre@dowjones.com

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