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Uppy's Finds (Equity) Partner

New company MACS will be largest ExxonMobil fuel marketer in U.S.

RICHMOND, Va. -- Another private-equity firm has entered the convenience store fray, gobbling up more than 200 sites in the Northeast by acquiring a majority interest in the Uppy's Convenience Store chain, as reported in a Morgan Keegan/CSP Daily News Flash yesterday. Catterton Partners, a consumer-focused private-equity firm, announced the deal yesterday and the creation of a new company dubbed Mid-Atlantic Convenience Stores (MACS).

"We believe it is an attractive time for Catterton to enter the industry, as the economics of convenience stores are increasingly [image-nocss] driven by non-fuel retail sales," said Nik Thukral, a partner at the equity group Catterton Partners. "Moreover, there are significant opportunities for future consolidation as MACS seeks to achieve scale in the highly fragmented convenience store industry."

Steve Uphoff, CEO of Uppy's, is expected to remain with the new company in the same role. He also will retain "a substantial financial interest" in the new company. Other Uppy's management also is expected to be retained.

"MACS is a growing platform with an attractive portfolio of stores, a strong retail offering for consumers and a highly-experienced management team," said Thukral.

Uphoff added, "We are pleased to complete this transaction, which will immediately enhance our footprint and solidify our position in the Mid-Atlantic states. Catterton has a strong record of partnering with entrepreneurs to build successful growth enterprises. We look forward to benefiting from Catterton's retail and consumer expertise as we work together to grow the business, optimize our operations, expand our retail offering and develop a deeper connection to customers.

"We are excited about this transaction and believe it will lead to accelerated growth, enhanced service and additional product offerings for our customers, greater benefits for the communities we serve and increased opportunities for our employees."

The deal comes on the heels of Uppy's contracting to purchase 170 convenience stores/fuel stations from the Exxon Mobil Corp., announced in November. The deal is now expected to close under the new company, MACS.

Catterton joins other private equity firms, most notably Sun Capital Partners Inc., which purchased the Village Pantry and Worsley convenience store chains in 2007 and 2008, in seeing a future in investing in the c-store industry.

Catterton Partners, Greenwich, Conn., invests in several major consumer segments, including food and beverage, retail and restaurants, consumer products and services, and media and marketing services. Representative investments that Catterton Partners has led include Breyers Yogurt, Cheddar's Restaurants, Heartland Recreational Vehicles, O.N.E. (One Natural Experience) beverages and Restoration Hardware.

"Through [Catterton's] other retail investments over the past 20 years, we have gained extensive knowledge about the consumer that we can leverage to enhance performance, particularly with respect to implementing a differentiated retail strategy for MACS," Thukral said.

Uppy's was founded in 1995 by Uphoff as a single retail convenience store in Richmond, Va., where it's still based today. Since its inception, Uppy's has experienced significant growth as a result of a well-planned expansion program, innovative marketing programs and strong demographic and geographic dynamics.

Not counting the pending ExxonMobil acquisition, Uppy's operates 44 Virginia locations and employs more than 600 team members. It is dedicated to providing exceptional customer experience along with quality branded goods and services. Uppy's features such brands as ExxonMobil, Dairy Queen, Subway and Noble Roman Pizza.

In addition to the company-operated stores branded as Uppy's and Exxon On the Run, through common ownership. there is a separate wholesale gasoline distribution company, Southside Oil, serving the Mid-Atlantic and southern United States. Southside Oil currently provides gasoline distribution services to approximately 109 dealer-served BP and ExxonMobil gas stations.

As a result of the transaction, MACS will be the largest ExxonMobil fuel marketer in the United States, according to the company. The MACS properties operate on prime retail sites in desirable geographies with strong demographic trends, and generate superior operating metrics significantly above industry averages, the company said in a press release. Furthermore, MACS will be operated by an experienced management team and is positioned to grow both organically and via acquisitions.

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