[CORRECTION: Semyon Logovinsky founded ARFA Enterprises Inc., but he is no longer with the company. ARFA is currently owned by Alex Prakhin. CSP Daily News regrets the error.]
HOUSTON -- As reported in a CSP Daily News Flash yesterday, Motiva Enterprises LLC, which markets Shell-branded gasoline in the eastern United States, has sold its interest in 54 sites in the greater Philadelphia and southern New Jersey areas to Bronson Oil Holdings LLC, an entity with owners in common with ARFA Enterprises Inc., a Pennsauken, N.J.-based [image-nocss] multibranded wholesaler with a presence in Philadelphia, as well.
The sites were offered for bid earlier this year. According to a confidentiality agreement between the parties, the purchase prices cannot be disclosed at this time. The stations will remain Shell-branded under a Motiva wholesaler supply agreement with ARFA as the stations' direct supplier.
ARFA is owned by Semyon Logovinksy, a Russian immigrant who has been in business more than 20 years including as a CITGO brand jobber.
With this agreement, ARFA, Bronson and their affiliates will now supply the motoring public with more than 90 million gallons of Shell-branded fuel annually. In addition to the newly acquired properties, ARFA currently operates or supplies nearly 200 other branded wholesale sites in the states of Pennsylvania and New Jersey. The company is new to the Shell brand.
"Motiva's strategies of growth through the wholesale class of trade are further exemplified through this sale," said Jim Deakin, Motiva's general manager of retail for the East region. "While ARFA Enterprises will be a new wholesaler to Motiva, they have demonstrated their growth aspirations through a recent acquisition of branded sites and a refined products terminal in the area. Their experience with multibranded distribution and retail positions them well to grow the Shell brand in these markets."
This divestment is in line with Motiva's publicly stated intent to transition retail assets to wholesale in a number of regions to better support the wholesale business and move toward a vision of becoming the best fuels retailer.
Two years after launching a strategy that would put many of its retail sites in wholesalers' hands, Shell Oil Products U.S. said it was expanding the policy and would sell off all its retail holdings by 2010. We are continuing the strategy we launched two years ago to grow through the wholesale class of trade, including wholesaler JVs [joint ventures], Shell spokesperson Anne Peebles told CSP Daily News in early October. We are going to be transitioning more markets from direct-supplied to wholesale- or wholesale/JV-supplied.
Stressing that most of these stations will remain Shell-branded, Peebles said the market transition, which involves dissolving its multisite-operator (MSO) partnerships, is a matter of portfolio optimization for the Houston-based Big Oil company. We're continuing with our strategy because our wholesale-focused strategy and U.S.-portfolio optimization work are delivering results that exceed expectations. Our larger joint ventures have proven to be successful and our wholesalers are performing very well. As a result, we have a number of wholesalersboth existing and newwho want to grow with Shell.
In 2005 and 2006, Shell transitioned its direct markets in Cincinnati; Columbus, Ohio; Denver; and Indianapolis. At the same time, brand partner Motiva transitioned Atlanta; Austin, Texas; Baton Rouge, La.; Birmingham, Ala.; Orlando, Tampa and Southwest Florida; Memphis, Tenn.; and some individual sites in Connecticut. This year, Shell completed the transition of its sites in Southern California to Tesoro as part of the sale of its refining and terminal assets. It also transitioned direct markets in Kansas City and Hartford/New Haven, Conn.
What's new [is] the additions to the list of markets for transition, Peebles said. Markets added to our existing transition/sale list include Chicago, Boston, New York, Southeast Florida, Seattle, San Francisco, Washington, D.C., and the remaining sites in Los Angeles. These transitions are to take place between now and end of 2009.
The new joint-venture model allows Shell and Motiva the opportunity to participate in the market/site income streams with a more efficient operating structure, according to Peebles. These relationships allow Shell and Motiva to mitigate risk while continuing to influence long-term branding decisions, capital structure, growth, dividend streams and real-estate presence.
In early September, Motiva sold its interest in 18 retail gas station sites and assigned Shell-branded supply agreements to an additional 35 sites in the Hartford/New Haven, Conn., area to CPD Parent Properties LLC, a subsidiary of Chestnut Petroleum Distributors Inc., a New Paltz, N.Y.-based wholesaler and distributor.
Motiva refines and markets branded products through more than 9,000 branded stations in the eastern and southern United States. Shell Oil Co. and Saudi Refining Inc. are each 50% owners of Motiva.
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