RAMAT GAN, Israel -- With 26 stores bought in March, 14 in April and now 13 in May, EZ Energy Ltd. is wasting no time planting its flag in the U.S. c-store market. The Israeli holding company, controlled by Eli Zahavi, and fronted by CEO Avi Geffen, a former executive with Alon Israel Oil Co., has just signed a purchase contract for 13 gas stations and c-stores for $12.7 million plus inventory, according to Globes Online.
As in all previous acquisitions, EZ Energy declined to name the sellers or provide any details on the stores' locations or branding, [image-nocss] due to confidentiality agreements. The three spring transactions are expected to close in June and July, vice chairman Oren Zahavi told CSP Daily News.
Globes reported that EZ Energy will operate the c-stores and gas stations for 20 years under the seller's brand and franchise, while rebranding a dozen of the sites. It will pay a one-time franchise fee of $30,000 per store plus 8% of the stores' turnover. According to the company, the c-stores generated $12.9 million revenue and the gas stations sold 31.6 million gallons in 2006.
The company said it would finance the acquisition through a combination of bank financing, sale-leasebacks and its own resources.
After establishing such a quick acquisition pace, EZ Energy has no plans to slow down. We announced we're looking at 65 additional locations, said Zahavi, noting that this may not be an up-to-date figureplacing the company at 118 sites if all transactions should go throughbut is as far as the company is willing to currently disclose. He did acknowledge that the company is considering multiple transactions and has fairly high standards.
If you look at the NACS average, we try to concentrate on steady-cash-flow, high-volume, high-EBITDA locations, Zahavi said. And a lot of opportunities we actually see are below that and don't meet our criteria based on current performance. It all goes down to pricing and negotiations.
And thanks to its financial footing, EZ Energy has better leverage than others when it comes to closing the deal. Basically we're cash buyers, said Zahavi. We have that kind of leveragewe see more acquisitions than other parties.
Although he said opportunities were plenty, Zahavi declined to disclose which areas of the country EZ Energy is focusing its money on; at least one acquisition took place on the East Coast. An earlier report by Y Net New.com revealed that the company is targeting clusters of stores that ensure high yields while also introducing financial partners, so that it can use only a small amount of equity to buy a large number of sites.
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