High's Time for a Change
Distributor Carroll Independent Fuel moves into retail with 46-store deal
BALTIMORE -- Carroll Independent Fuel Co.'s acquisition of High's of Baltimore Inc., which operates High's Dairy Stores, initiates distributor Carroll's entry into the company-operated channel of trade.
Baltimore-based Carroll distributes fuels to retail and commercial customers throughout the Mid-Atlantic region, and prior to this deal, was not a retailer.
As reported in a Morgan Keegan/CSP Daily News Flash yesterday, High's directly operates 46 retail convenience stores and gas stations located in highly populated areas throughout Maryland, primarily serving customers in the Washington, D.C., and Baltimore suburbs.
For more than 60 years, High's has been a leading petroleum marketing and convenience store operator in the region. At one time, it had as many as 500 locations. Its stores offer Shell and CITGO branded fuels, a wide assortment of convenience merchandise and freshly prepared coffee and food.
In April 2011, High's sold 20 locations to several buyers in a move that was intended to allow the company to refocus its efforts on its core assets and to open new stores (see Related Content below for previous CSP Daily News coverage).
According to a report by Oil Express after the chain was put on the market, High's gasoline sales in 2010 amounted to 56.7 million gallons sold under the Shell and CITGO brands. The average store sells 1.3 million gallons of fuel.
Merchandise sales were $36.6 million in 2010, with the average store notching up $850,000 in sales at a 34.6% gross margin.
Total asset-level EBITDA was $9.8 million last year, said the report, with an average EBITDA of more than $225,000. High's said renovations were expected to drive asset-level EBITDA to $10.7 million in 2011, $11.9 million in fiscal 2012 and $12.8 million in 2013.
Seventeen of the stores are controlled via fee simple interest and lot sizes are just over two acres, while 29 others are leased with a minimum seven years on the lease, and a maximum 16 years if options are renewed. Eighteen of the sites are new-to-industry, razed-or-rebuilt or renovated in the last five years, with the average age of all stores put at seven years.
Carroll will retain the majority of High's executive management team and store personnel, it said.
"Brian Darnell will be leading the organization as president of High's of Baltimore LLC. Ben Jatlow will serve as vice president of retail operations and Briana Darnell will serve as vice president of real estate and development," said John Phelps, president of Carroll.
"We are absolutely thrilled to be aligning with such a high-quality marketer in Carroll," said Brian Darnell. "The acquisition by Carroll will ensure the continuance of a well-recognized brand and the accelerated growth of the High's name within our market area."
Richmond, Va.-based Matrix Capital Markets Group Inc. managed the sale and provided merger and acquisition advisory services to High's.
It provided merger and acquisition advisory services to High's, which included valuation advisory, transaction structuring, marketing and negotiating. The transaction was managed by Tom Kelso, managing director and head of the Energy & Multi-Site Retail Group; Spencer Cavalier, director; and Sean Dooley, senior analyst.
Commented Cavalier: "The acquisition of High's by Carroll is essentially the merger of two leading and very successful family owned and operated petroleum marketing and convenience store companies. Bolstered by the Carroll's fuels marketing and logistics platform, the highly respected and recognized High's brand will continue to grow in the Mid-Atlantic region."
He added, "Matrix has been honored to have had an advisory relationship with High's shareholders since 2003, which has culminated in this successful transaction."