ABILENE, Texas -- Alon USA Energy's strategy for retail growthexpanding its store count in West Texas to access the FINA gasoline produced at its Big Spring, Texas, refinerylimits growth prospects. But when an opportunity shows itself, the Dallas-based company is quick to assess it and make a decision.
Such is the case with the Skinny's convenience-store chain, which Alon USA announced yesterday it has entered into am agreement to acquire, as announced in a CSP Daily News Flash.
Since [we have] a geographical focus, the opportunities [image-nocss] are infrequent, but we want to be prepared to take advantage of them when they do occur, Jeff Morris, president and CEO of Alon, told CSP Daily News.
Skinny's Inc. is a privately held Abilene, Texas-based company that owns and operates 102 FINA branded stores in Central and West Texas.The total purchase is estimated to be approximately $70 million plus certain post-closing adjustments.
Of the 102 stores, two-thirds are owned and one-third are leased.Alon, which currently operates 206 stores in West Texas and New Mexico, expects to continue to operate these stores under the FINA brand and to supply motor fuels to the stores from its Big Spring refinery.Alon also anticipates converting the acquired stores to the 7-Eleven brand, Morris said.
The Skinny's brand has a lot of local equity and it's a good brand, he said, but I think the 7-Eleven brand also brings some excitement with it with products like Slurpee and Big Gulp.
He added, This acquisition builds on our strategic objective of expanding the physical integration of our Big Spring refinery with our retail outlets via Southwest Convenience Stores. Furthermore, the addition of 102 stores to our current retail operations will strengthen our leadership position as the largest 7-Eleven licensee in the United States.
The purchase runs counter to the strategy being employed by most Big Oil companies, which are now selling off a majority of their retail sites to jobbers and retailers.
The reason we're doing it is integration with our refinery in Big Spring, Morris said. If you have a refinery in Houston, you don't have to have an outlet to sell your fuel. You can put your gasoline or diesel on the Colonial or Plantation [pipelines] or put it on a barge and it goes up to New York harbor. When you're in Big Spring, Texas, you're not going to do that. We have to sell it to West Texas.
He continued, We feel that the integration is a value for both the refinery and the convenience store because one of the issues that convenience stores are dealing with today is reliability of supply. We solve that issue for Southwest Convenience Stores by having our own refinery, which assures them and other FINA-branded stores of supply.
For more than a decade, the owners of the Skinny's chain, the Davis family, have purchased fuel through Alon USA, making the integration of the stores into the company a bit easier. The Davis family built a very strong business, and we are delighted that the Skinny's family is joining our retail operations, Morris said.
He added that it was the relationship between the two companies that made the purchase an obvious decision.
I've known [Skinny's president and CEO Joe Davis] for about 20 years now, and we've been supplying Skinny's fuel from our Big Spring refinery for well over a decade, Morris said. So it came from along-term relationship. Whenever Joe reached the point where he wanted to consider selling the businessbecause of the relationship, [he knew] we could see value together and we ended up striking the deal.
Davis agreed, saying in a press release, We are excited about the opportunity to join the Alon team under the 7-Eleven brand. Our cultures are founded on the same premise of serving the customer. Both of our companies are proud of our West Texas heritage, and we at Skinny's appreciate joining an organization that has operated the Big Spring Refinery for over 75 years.We are confident that our 102 stores will be a strong addition to Alon's existing 206 locations.
Alon anticipates that the closing of this acquisition will occur in the second quarter of 2007, following regulatory approval and other closing conditions. Alon will then operate 308 c-stores.
Alon USA Energy, based in Dallas, is an independent refiner and marketer of petroleum products, operating primarily in the Southwestern and Western regions of the United States. The company owns and operates four sour and heavy crude oil refineries in Texas, California and Oregon, with crude oil throughput capacity of approximately 170,000 barrels per day.
Alon markets gasoline and diesel products under the FINA brand name and is a leading producer of asphalt. Alon also operates more than 200 convenience stores in West Texas and New Mexico under the 7Eleven and FINA brand names and supplies motor fuels to these stores from its Big Spring refinery.
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