SANFORD, N.C. -- The Pantry Inc. has signed a definitive agreement to acquire all 66 Petro Express Inc. convenience stores55 in North Carolina and 11 in South Carolinafrom Petro Express Inc. The deal continues into 2007 The Pantry's acquisition momentum from last year.
This acquisition also includes the wholesale fuels business of Carolina Petroleum Distributors of Charlotte Inc., which sells more than 100 million gallons of fuel annually to more than 450 commercial customers.
The 66 stores generated revenues of approximately $629 [image-nocss] million for the 12 months ended October 2006.
"The addition of Petro Express, which has built a leading market position in the Charlotte area, complements our existing store base and is expected to be immediately accretive to our earnings per share, said Pantry chairman and CEO Peter J. Sodini. While we already operate 327 stores in North Carolina, we have not focused on Charlotte, and our presence there to date has been nominal, partly because of Petro Express's strength. This acquisition provides us with an excellent platform for future growth in one of the Southeast's most fundamentally attractive metropolitan areas."
He added, "The Petro Express stores are mostly large, state-of-the-art facilities that generate the highest average revenues of any acquisition in The Pantry's history. All but 10 of the stores have car washes, for example, and their merchandise and service volumes are exceptionally strong, with average store sales over 50% higher than the company's stores. This transaction brings the total number of stores we have acquired or agreed to acquire so far in fiscal 2007 to 133."
Petro Express vice president Thomas J. Hall said, We believe this sale offers great opportunities for the employees of our companies to further their careers with The Pantry.
On a personal note, Hall added, I regret that my cofounder and longtime friend Dan Shaver can't share this moment with me. From our first meeting with representatives of The Pantry, Dan knew this was the right thing for us to do. He started the company with a vision of being simply the best' and the sale to The Pantry gave him comfort that his vision would continue.
[Editor's Note: Shaver passed away on January 2. CSP Daily News sends condolences to his family, friends and colleagues.]
This deal comes on the heels of several other acquisitions by the Pantry in December and November:
Seven Rascal's c-stores in Mississippi, purchased from Graves Oil Co., Batesville, Miss. A single c-store operating under the Go Time banner in Naples, Fla. Eight c-stores in Gainesville and Ocala, Fla., purchased from Rousseau Enterprises Inc. The stores operate under a variety of banners, including LeStore. 24 Sun Stop c-stores in Florida, Georgia and Alabama, purchased from Southwest Georgia Oil Co. Inc. 16 Angler's Mini-Mart c-stores in the Charleston, S.C., market. Two c-stores, one in Sanford, N.C., and the other in Columbiana, Ala.The Petro Express acquisition, which is subject to regulatory approvals and other customary closing conditions, is expected to close in the The Pantry's third fiscal quarter. The company plans to finance the transaction with a combination of available funds and lease financing.
Meanwhile, the Pantry also announced yesterday significantly lower gasoline margins for its first fiscal quarter ended Dec. 28, 2006.
"Our first-quarter results will be significantly below a year ago, and unusually low relative to our historical seasonal trends, primarily due to an average gasoline margin per gallon in the low eight-cent range; however, gas margins over the past few weeks have been more in line with historical seasonal trends, Sodini said.
The company said it will release results for the quarter on January 25.
Headquartered in Sanford, N.C., The Pantry had revenues for fiscal 2006 of approximately $6 billion. As of yearend 2006, it operated 1,506 stores in 11 states under banners including Kangaroo Express, its primary operating banner.
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