SEVEN HILLS, Ohio -- Although it would neither confirm nor deny reports for CSP Daily News, 7-Eleven Inc. is the likely buyer of EZ Energy USA Inc.'s 91 convenience stores in Ohio and Pennsylvania. As reported in a Raymond James/CSP Daily News Flash on Monday, The Dallas-based c-store giant is expected to close on EZ Energy's retail sites in the next few weeks, according to a report in Crain's Cleveland Business.
Parent company EZ Energy Ltd. is selling all of its gas station and c-store operations for $64 million to what the Israel-based company called a "foreign gas station operator."
The company has not disclosed the buyer, pending the closing of the deal; however, a document obtained by Crain's that EZ has circulated among its vendors shows 7-Eleven will be the new owner.
The newspaper also cited an early antitrust clearance for the transaction, issued on August 27 by the Federal Trade Commission (FTC).
7-Eleven has only 23 location in Ohio, the report said, citing the company's website.
In July, EZ Energy USA president and CEO Gregg Budoi would not speculate on the future of the EZ Energy brand or company. "Effectively, the buyer is buying all of our operating assets," he told CSP Daily News at the time. "So we will see what we're going to do after that and if we're going to get into a new venture or continue on [as a c-store retailer], but clearly that would require us to get some more stores."
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Earlier this year, EZ Energy had defaulted on the third of five premium payments to its bondholders but arranged to restructure its bond amortization schedule when the buyer surfaced, according to reports it issued publicly and cited by the paper. It said the deal may close as soon as September 15.
Budoi said the sale may close as late as October 15 rather than September 15. "We gave ourselves some wiggle room," Budoi, a one-time CFO of the former Dairy Mart Inc. chain now is owned by Circle K told Crain's.
Budoi had participated with Eli Zahavi, an Israeli investor who lists his base as New York City, in building the EZ Energy USA business since its 2009 launch in Mansfield, Ohio, with the purchase of a handful of c-stores. The company's biggest growth came in 2009 when it bought 65 BP ampm stores in Ohio and the Pittsburgh area. EZ operates some stores under ampm and others under its own Easy Trip brand.
EZ Energy's strategic review of options for the business included bringing in a partner or selling to a private-equity firm, said the report.
"We looked at selected buyers for the company and decided this was the best way to go," Budoi said. "We did not take this out for a wide sale process. We selected a buyer we believe will do quite well."
Industry insiders told Crain's that the EZ Energy chain may have suffered from the rapid rise of the Giant Eagle supermarket chain's GetGo c-stores, which give consumers a discount on gasoline based on their supermarket purchases; reduced margins due to high gasoline prices; and taxation under Ohio's commercial activity tax; however, Budoi said no one factor led to the sale decision.
Auday Arabbo, president and CEO of the Associated Food & Petroleum Dealers trade group representing 1,000 Ohio members, said he "would not be surprised" to see 7-Eleven emerge as EZ Energy's buyer.
"7-Eleven has been very aggressive," Arabbo told the paper. "They offer a pretty good deal to operators in terms of changing their location's appearance. The commercial activity tax gives an advantage to the monsters of the industry.
EZ Energy USA, Seven Hills, Ohio, owns 91 stores in Pennsylvania and Ohio, 22 of them dealer locations and the others company operated under the Easy Trip brand.
7-Eleven operates, franchises or licenses approximately 9,400 7-Eleven stores in North America. Globally, there are some 47,300 7-Eleven stores in 16 countries. During 2011, 7-Eleven stores worldwide generated total sales close to $76.6 billion.
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