Motiva Continues Retail Purge

Joint venture Colbea Enterprises picks up 34 Shell sites in Rhode Island

Samantha Oller, Senior Editor/Fuels, CSP

CRANSTON, R.I. -- Motiva Enterprises LLC's load of retail assets just got 34 stores lighter. As reported in a CSP Daily News Flash yesterday, Motiva, the Houston-based company that markets Shell-branded gasoline in the eastern and southern United States, has agreed to sell its interest in 34 Shell-branded retail sites in Rhode Island to Colbea Enterprises LLC.

A confidentiality agreement between Motiva and Colbea prohibits the disclosure of the purchase price, but Andrew Delli Carpini, CEO of East Side Enterprises LLC, told CSP Daily News [image-nocss] that the deal was in the works for the past year. "Our basic interest is to go in and capitalize on properties and try to improve the Shell brand throughout the entire state," he said. "Shell has No.1 market share in the state, but obviously New England as an entirety is a more seniored area, an older territory, so it's basically a capital infusion to raise/rebuild or remodel the locations."

For East Side, that reinvigoration includes diversifying its own retail offer to counteract tight fuel margins. "Margins have been difficult at best, so our strategy is to look at different revenue streams for properties, both by co-brands, alliances and by partnering up with different entities," said Delli Carpini, who cited East Side's alliances with Dunkin' Donuts, Tim Hortons, the U.S. Postal Service, Coinstar and Ronzio's, a Rhode Island-based pizza and sub concept.

The latest development on the partnership front: East Side just completed a successful test of a DVD rental kiosk with Redbox Automated Retail LLC, and that program will be expanded to seven additional sites within the next 60 days, Delli Carpini said. Add car washes, which East Side has at 15 of its locations, and the retailer has several ways to generate additional revenue to subsidize the margin loss.

Motiva is a joint venture between Shell Oil Co. and Saudi Refining Inc., and refines and markets branded products through more than 8,100 branded stations in the East and South. Colbea is a joint venture between Motiva and distributor East Side Enterprises, Cranston, R.I.

The divestment continues Motiva's feverish selloff of its retail assets in an attempt to focus squarely on the wholesale business. Just last week, the company sold 10 Houston-area stores to The Lewis Group LLP, and in November, 54 sites in the Philadelphia and southern New Jersey markets transitioned to Bronson Oil Holdings LLC. In January, wholesaler Sam's Real Estate Holdings of Georgia LLC picked up 47 Shell sites from Motiva in greater Atlanta and northern Georgia.

"Motiva continuously evaluates its options with regards to strengthening network growth through the wholesale class of trade, and this offer presented just that opportunity," said Jim Deakin, Motiva's general manager, Retail East region, in a press release announcing the most recent sale. "Colbea is a proven company and has demonstrated its experience in managing and growing the Shell brand in Rhode Island."

Colbea already owned and operated 21 Shell locations in the state of Rhode Island, while East Side Management operated an additional nine locations. With the latest acquisition, those nine sites have folded into Colbea's portfolio to give it operational control of 20 locations in the state and a vested interest in an additional 25 through a supply contract, franchise agreement, open dealer or dealer arrangement.

With this buy, Colbea will also become one of the largest Shell-branded wholesalers in the Northeast and supply more than 85 million gallons annually to the 55 locations. It also will act as a wholesaler for Shell-branded motor fuels.

"For the newly acquired sites, we would look how they would fit into the future and whether capital improvements would need to be made," said Delli Carpini. "We'd want to start to invest in new-to-industry [sites] in the state where it makes sense to build the Shell brand back up. And we're talking to franchisees to see if they're interested in co-branding with any of these ancillary companies to see if they can generate additional revenue for themselves."