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BP Selloff on Track

Economy slows, but sale of "lip-smacking" retail assets continues; Midwest M&A

[Editor's Note: This article is the sixth in an ongoing series on how the recession is affecting the c-store landscape and focuses on recent activity in the Midwest region.]LA PALMA, Calif. -- The sorry state of the economy is not lost of BP's Fiona MacLeod. That's why she's more than pleased that the planned selloff of the oil company's retail direct-ops remains on target. A little over a year into the conversion of its c-stores to the ampm brand and the simultaneous sale of the assets (about 800 sites in all), MacLeod, president of BP's retailconvenience for the United [image-nocss] States and Latin America, told CSP Daily News that a combination of strong assets and high-quality buyers has kept the process alive, despite the growing credit crunch.

"'Lip-smacking assets' is how one of our buyers described what we're offering," MacLeod said. "The key is that we're selling good sites and a good brand."

Close to half of the 800 company-operated BP sites are sold, according to Bill Fry, vice president of operations for BP, which has retail operations based in La Palma, Calif. About 30% to 40% are in the advanced-contract stages and will more than likely change hands in the nextfew months. Then BP is working with a handful of potential buyers for the remaining 20%, he said, adding that he expects all sales to be completed by year end.

Here is a list of the areas where asset sales are complete: New York City; northern New Jersey; Pittsburgh; Indianapolis; northern Indiana (parts of metro Chicago); Las Vegas; Phoenix; Tucson, Ariz.; and Portland and Eugene, Ore. Columbus, Ohio is currently undergoing transition.

Many stores in thefollowing marketing areas have been sold, and additional deals are in the works. These marketing areasinclude greater Miami, Atlanta and Chicago.

While noting how increased banking due-diligence is slowing down their progress, MacLeod said BP did have timing on its side. The oil company began actively pursuing buyers a year ago, months before the catastrophic meltdown of the nation's financial powerhouses. The timing allowed BP and prospective buyers to begin constructing deals, so when credit became an issue, buyers and lenders were already in place. "Other companies are now trying to sell, but it's a tough time to be starting that search for [new] bidders," she said. "We've been at this a year now and we're helping [buyers] work through the banking crisis."

BP had a timetable to convert stores to the ampm brand, and said that those goals have already been met. Andrew Baird, vice president of marketing for BP, said advertising efforts--ranging in some marketing areas from billboards to all-you-can-eat promotions at major-league baseball parks--have resulted in a 60% brand-recognition ratings overall in key launched marketing areas.
"In every marketing area we've gone into we've seen awareness grow," Baird said. "Customer feedback on everything from the food offer to store ambience has been positive."

Saying that sales at converted locations have been definitely meeting company expectations, MacLeod said, "Knowing what's going on with the economy, our brand experts were blown away by the numbers we're seeing in terms of brand acceptance."

Activity from major oil companies like BP has stimulated mergers and acquisitions nationwide, but the Midwest region has seen more than its share. Among the winners in the BP selloff are Taylor, Mich.-based Atlas Oil, Mansfield, Ohio-based EZ Energy Ltd. and Heath, Ohio-based Englefield Oil, and Anderson, Ind.-based Ricker Oil Co. Inc.

Two other recent sales of note include West Des Moines, Iowa-based Kum & Go's announced acquisition yesterday of 37 stores from the Cody's chain out of Springfield, Mo. (See full story in this issue of CSP Daily News), and the purchase last week of 15 Louisville, Ky., sites by Rockford, Ill.-based Road Ranger.

For a PowerPoint of reported M&A activity in the Midwest, click the Download Now icon below. And for an in-depth exploration of the buying-and-selling climate emerging as a result of today's economic downturn, look to CSP magazine's February cover story. Also,click hereto check out CSP's new and exclusive interactive map that catalogs reported merger-and-acquisition activity by region.

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