Insider’s View: Q3 2015 M&A Review
Strong demand remains for c-store assets, but downward pressure may be coming on purchase prices
SCOTTSDALE, Ariz. -- Although the third quarter of 2015 was relatively quiet in terms of new merger-and-acquisition activity in the convenience-store industry, there were a few notable transactions by some of the major industry players, such as Circle K, Sunoco and TravelCenters of America.
In addition, Westex Capital LTD completed the sale of all of its convenience stores and its fuel and propane distribution business. The fourth quarter is historically the busiest quarter in terms of M&A activity, as both buyers and sellers try to complete or at least sign deals before the end of the year. We are aware of several transactions that should be announced later in the year. Most importantly, there continues to be very strong demand for quality companies and portfolios of convenience-store assets.
SEI Fuel Services Inc., an affiliate of 7-Eleven Inc., announced the purchase of the dealer fuel supply business of LavigneBaker Petroleum LLC in and around New Orleans. Since 2012, SEI Fuel has purchased four other wholesale businesses and now sells more than 600 million gallons of fuel annually to open dealers. With this transaction, SEI Fuel enters the New Orleans market as the largest Shell-branded distributor, supplying approximately 60 branded locations.
In July, 7-Eleven announced that it was selling 25 gas stations and convenience stores in 10 states. The company felt the stores did not fit its current business model. All of the sites are operational, and 16 of the sites are convenience stores with gas, while nine do not offer fuel. NRC Realty & Capital Advisors, LLC was engaged by 7-Eleven to coordinate the sale.
In August, 7-Eleven closed on the sale of Rockland, Massachusetts-based Tedeschi Food Shops and its approximately 180 convenience stores. A 7-Eleven spokesperson said that a rebranding of the Tedeschi locations to 7-Eleven will be gradual, and, for now, the stores will continue to operate as Tedeschi Food Shops. However, 7-Eleven intends to remodel and rebrand several stores later this year.
CST Brands Inc./CrossAmerica Partners LP
CST Brands Inc. and CrossAmerica Partners LP announced the closing of dropdown transactions between the two companies that involved the acquisitions of the real property associated with 29 new-to-industry stores (NTIs) and an additional 12.5% interest in CST Fuel Supply LP for aggregate consideration of $142 million in cash and 3.6 million newly issued common units representing limited partner interests in CrossAmerica. With this transaction, CST Brands now holds approximately 5.1 million common units of CrossAmerica.
CrossAmerica also announced that it closed on the previously announced purchase of the One Stop convenience-store chain based in Charleston, W.Va., which includes 41 company-operated convenience stores, four commission agent sites, nine dealer fuel supply agreements and one franchised quick-service restaurant.
Alimentation Couche-Tard/Circle K
In July, Circle K announced that it was selling 26 former Circle K gas stations and convenience stores in four Midwestern states.
The company also announced that it had entered into an agreement with Comercializadora Circulo CCK SA de CV to rebrand more than 700 of CCK’s existing Extra convenience stores throughout Mexico to the Circle K brand by August 2017. Under this agreement, the number of Circle K stores in Mexico will grow to 1,100 by August 2017, and a minimum of 2,400 by 2030.
Further expanding the presence of the Circle K brand, the company said that it will rebrand the approximately 1,500 Kangaroo Express convenience stores purchased from The Pantry in early 2015 to Circle K.
In September, Circle K announced that it had entered into an agreement with Kocolene Marketing, the retail division of Seymour, Indiana-based holding company Kocolene Development Corp., to purchase its 13 Fast Max convenience stores.
Energy Transfer Partners LP/Sunoco LP
In an effort to accelerate Sunoco LP’s exposure to the retail side of the convenience-store business, Energy Transfer Partners LP (ETP) announced that it is selling 100% of Susser Holdings Corp. to Sunoco LP for approximately $1.934 billion in aggregate consideration.
In August, Sunoco LP’s Susser Petroleum Property Co. LLC was the successful bidder of the assets of Aziz Convenience Stores LLC, consisting primarily of 28 convenience stores throughout Hidalgo County in southern Texas, for a purchase price of $41.6 million. The sale was completed in conjunction with bankruptcy proceedings under chapter 11 filed by Aziz in August 2014.
Sunoco also announced that it intends to open 40 new Stripes stores this year, all with Laredo Taco locations, and plans to build at least 40 new sites in 2016.