Rather, for the president and CEO of VERC Enterprises Inc., a Duxbury, Mass.-based owner/operator with seven ExxonMobil sites, it is the final step of a long departure from a major oil company that has been a direct part of VERC's business for the past 30 years, [image-nocss] and a dominating Northeast presence.
"Look who Global is replacing: You're talking about ExxonMobil, an icon in the market," Vercollone told CSP Daily News. "They've been the No. 1 marketer since I can remember. [Global] has huge shoes to fill." In 2008, VERC took its own parting steps by rebranding 14 of its sites from Exxon to Gulf. Regardless, it's tough breaking off that direct supply relationship for good.
Now, VERC will begin building ties with Global Partners LP, one of the largest wholesale distributors and terminal owner/operators in the Northeast, based in Waltham, Mass. As reported in a Morgan Keegan/CSP Daily News Flash yesterday, Global has signed an agreement to acquire 179 ExxonMobil sites in Massachusetts, 22 in Rhode Island and 20 in New Hampshire; all will remain Mobil branded.
Also as part of the agreement, Global Partners has the supply rights to 31 independently owned and operated Mobil stations in those three states, including VERC's sites.
"At the end of the day, the company has prospered with ExxonMobil," Vercollone said. "We're losing that. It's not a reflection on Global; it's just reality. This is a new stage, a new direct partner."
Global, a master limited partnership that is controlled by the Slifka family, has a 50-year relationship with ExxonMobil as a distributor, and had acquired terminals from the major oil in the past.
According to Global president and CEO Eric Slifka, the decision to pick up the retail sites was three-pronged: It enables the partnership to expand its wholesale gasoline and diesel volume; it supplies a new and significant, year-round income source; and it promotes efficiencies and opportunities within the rest of Global's wholesale supply operations.
"For Globalthe acquisition of these ExxonMobil assets is first and foremost a purchase that enables us to generate a strong and steady volume by supplying transportation fuels to these 221 locations to our supply and terminaling system," said Slifka during an early Tuesday morning conference call with analysts.
The acquisition, which is expected to close by end of year 2010, had a purchase price of $200 million. Financing has not yet been finalized; Global Partners said it is considering "several options," including plans to borrow under a revolving credit agreement with its bank group and/or secure the funds in the capital markets.
ExxonMobil declined to comment on whether there were other bidders for the sites, which include 42 company-ops and 148 dealer-ops. In a written statement, Ben Soraci, director of U.S. retail sales for ExxonMobil, said, "As a leading refined products terminaling and supply company in New England, Global Partners has been a valued ExxonMobil customer for nearly 50 years. I'm pleased that Global is extending its resources, capabilities and commitment to meeting the needs of Mobil customers throughout Massachusetts, New Hampshire and Rhode Island."
Global Partners plans to negotiate a contract for management of the company-ops and dealer relationships with retail operator Alliance Energy LLC, which is majority-owned by the Slifka family. Alliance, based in Lexington, Mass., operates more than 150 sites under its own c-store brands, Fast Freddie's and Mr. Mike's, in addition to ExxonMobil On the Run locations. It also distributes fuel to seven states in the Northeast.
The fact that both Global and Alliance are local gives Vercollone with VERC Enterprises a certain degree of comfort and confidence that the transfer of ownership from ExxonMobil to distributor will be successful and rewarding. "Anyone that has a headquarters in Massachusetts, that's a high degree of comfort, and it should be for other operators, that they're going to be taking over this diamond," he said. "I'm looking forward to building a strong relationship with Alliance, see what they're able to offer, and to grow the market."
Vercollone also anticipates a renewed energy from Alliance, noting that ever since ExxonMobil made the announcement to exit retail, "things stagnated a little bit. They're still No. 1, but not as aggressive as they could have been."
(Click here for previous CSP Daily News coverage of ExxoMobil's divestment announcement.)
From Global Partners and Alliance Partners' perspectives, they have great material with which to work. "The reason we think these sites are best in class is because they're going to be very, very difficultif nearly impossiblefor anybody to replicate," said Slifka with Global Partners, who described the stores as "power sites" thanks to their "big canopies, a lot of pumps, on all the right street corners."
The sites sold approximately 370 million gallons of gasoline and diesel in 2009, according to Global Partners. More than half of the gross margin generated by the acquisition will come from the supply and sale of gasoline, with the rest split between rent from the dealer-ops and c-store sales. Global will adopt the rent structures, and accompanying standard increases, from ExxonMobil, Slifka said.
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