SANFORD, N.C. -- The Pantry Inc. completed its acquisition of 19 convenience stores in North Carolina from Lee-Moore Oil Co. this past week. The stores have been operating under the TruBuy and On The Run banners and generated total revenue of approximately $66 million in 2004.
In an interview soon after the initial announcement of the deal, Kirk Bradley, president of Lee-Moore, told CSP Daily News that the business climate for companies the size of Lee-Moore was becoming more and more challenging. What we saw going forward were new sites that needed [image-nocss] a minimum of 2 to 2.5 acres, where historically, you only needed half an acre, he said. You're going to pay a $1 million or $1.5 million for that amount of dirt.
He said that with the costs involved in growth and the intellectual capital necessary to adapt to new concepts, such as foodservice and data-gathering technologies, retailers need to have the proper scale. Aggressive new competitors like discount mass-merchants entering the business and rising credit card fees don't help either. It's always been a penny business, but with 50% less pennies between credit cards and new competitors, you really have to have the scale to spread the cost of that intellectual capital.
The acquisition also includes various dealer fuel-supply arrangements for 20 additional stores. All of the acquired stores and dealer fuel-supply locations sell Exxon or Mobil gasoline brands and have been transferred to the company's recently executed branding and fuel-supply agreement with ExxonMobil Oil Corp.
The acquisition, which is expected to be immediately accretive to The Pantry's earnings per share, was financed with cash on hand and seller lease financing. Terms of the transaction were not disclosed.
Headquartered in Sanford, N.C., The Pantry is an independently operated convenience store chain in the Southeast and one of the largest independently operated c-store chains in the country, with net sales for fiscal 2005 of approximately $4.4 billion. As of Dec. 29, 2005, the company operated 1,401 stores in 11 states under several banners, including Kangaroo Express, Golden Gallon and Cowboys. Lee-Moore Oil was also based in Sanford, N.C.
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