CST Brands' National Ambitions
How a once-minor piece of Valero is becoming a retail giant
SAN ANTONIO -- Two weeks ago, Kim Bowers hopped on a plane from her home base of San Antonio to Allentown, Pa., for employee meetings and from there drove to upstate New York for a private meeting with senior leaders at a different company. Her pace is rushed, her energy contagious--an apt metaphor for the company she leads.
Bowers is CEO and chairperson of CST Brands Inc., the trailblazing operator of a retail network that its former owner, Valero Energy Corp., divested last year as a modest footnote to an otherwise multi-billion dollar refinery powerhouse.
In just a matter of weeks, CST has entered into two hugely important deals--important for different, yet related reasons.
Earlier this month, CST announced an $85-million agreement with Bethlehem, Pa.-based Lehigh Gas Partners, a transaction that on the surface seems modest but allows the retailer to parlay Lehigh’s status as a master limited partnership (MLP) company with critical corporate tax advantages; and to tap Lehigh’s strong distribution relationship with multiple major oil brands.
And late Wednesday, as reported exclusively by CSP Daily News, CST, the operator of approximately 1,350 stores in the United States and Canada, entered into a definitive agreement to acquire one of the industry’s best family-run chains, Nice N Easy Grocery Shoppes, in upstate New York.
Interestingly, in CSP magazine’s cover feature on CST Brands, some financial houses dubbed the company a single-digit, slow-growth investment.
That story couldn’t be further from the truth. CST has big ambitions, one that suggests that the Nice N Easy deal isn’t the last, nor is the Northeast the only frontier CST seeks to enter.
Already, some industry observers and financial analysts are staking CST and equity group Energy Transfer Partners (ETP) as the two companies to watch in integrating a highly fragmented convenience store industry replete with small- and mid-sized family-run businesses.
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