Insider's View: The Top M&A Deals of 2013 (Part 2 of 3)
Hess & Sunoco make headlines; 7-Eleven, Couche-Tard relatively quiet
SCOTTSDALE, Ariz. -- Hess Corp.’s decision to sell its retail assets made headlines in 2013, but we didn’t know just how the company would do it until today. Meanwhile, Sunoco’s new owners, Energy Transfer Partners LP, surprised the convenience store industry by growing rather than divesting its store base. Here are the top merger and acquisition deals in the convenience store industry from the past year.
Early last year, an “activist investor” in Hess Corp. urged the Hess board of directors to consider ways to maximize shareholder value, including the possibility of divesting certain assets or forming a master limited partnership (MLP) or a real estate investment trust. The focus was on the company’s approximately 1,360 gasoline and c-store locations in 16 Eastern states. Hess ultimately retained The Goldman Sachs Group Inc. to sell its retail assets. Today we learned that improvement to shareholder value will come in the form of a spinoff of its retail gas station network. The spinoff would be tax free and distribute all Hess retail shares to shareholders in Hess Corp., according to the company. Among industry analysts, estimates of the value of the gas station portfolio have varied widely, from $1.2 billion to as much as $3.4 billion.
Previously, rumors had swirled throughout the industry about potential purchasers for the Hess assets, with the names Alimentation Couche-Tard Inc., Marathon Petroleum Corp. and BJ’s Wholesale Club Inc. surfacing in recent weeks.
Beyond the retail sites, Hess entered into an agreement with Buckeye Partners LP to sell its East Coast and St. Lucia terminal network for $850 million. The company also sold its energy marketing business, which supplies natural gas and electricity to commercial, industrial and small business customers in the Eastern half of the United States, to Direct Energy for $1.2 billion. Hess announced in December that it was selling its commercial fuels business outside of the New York City area to Sprague Resources LP, based in Portsmouth, N.H.
In October, Sunoco Inc. surprised the industry by announcing the purchase, through an affiliate, of Mid-Atlantic Convenience Stores LLC (MACS), which has 300 convenience stores in the Mid-Atlantic region. When Energy Transfer Partners LP (ETP) bought the assets of Sunoco in 2012, there was widespread speculation that ETP would either sell or spin off the retail assets of Sunoco and focus on its pipeline, storage and processing business. The MACS acquisition clearly dispelled those rumors, at least for the moment. MACS had previously entered into an agreement with Circle K in 2012 to become a “brand developer” for Circle K, and the conversion of all of the MACS stores targeted for conversion to Circle K had been completed prior to the consummation of the acquisition. It is unclear how Sunoco will handle the Circle K branding agreement going forward.