DALLAS -- Having sat on the fence since its last major convenience store acquisition five years ago, Dallas-based Alon USA took a big step into the consolidation arena yesterdayas reported in a CSP Daily News Flashwith the announcement that it has executed an agreement to buy 55 stores from El Paso, Texas-based Good Time Stores Inc.
Alon will pay $30 million in cash and $7 million in assumed debt for the chain. Though the purchase is based on contingencies, President and CEO Jeff Morris told CSP Daily News the deal will mean a significant presence in [image-nocss] the fastest-growing market in the region.
Commenting under the caveat that the deal has yet to be finalized, Morris said, Clearly this is part of our integrated strategy. We serve the El Paso market with our pipeline in Big Spring, [Texas], and [with the acquisition], we'll be able to place the fuel we producethrough stores that we own.
The intention, according to Morris, is to expand the 7-Eleven and the Fina brands. Alon sells petroleum products under the Fina name and is a 7-Eleven licensee through its subsidiary, the Southwest Convenience Store chain out of Odessa, Texas. Morris noted that the Good Time locations originally flew the Fina flag and that the move will bring the stores full circle in terms of gasoline brand.
With regards to market share, the Good Time acquisition will give Alonmore than100 stores in El Paso. With 250 total stores in the market, that will make us No. 1 in El Paso, Morris said. It will make us the largest regional brand behind [Clovis, N.M.-based] Allsup's.
Morris described Good Time as a great chain with stores typically in the 2,000 sq.-ft. range. Others in the area agreed the chain was well-run, but said there were a few lower-volume locations in the mix. It will be interesting to see if they spin off any of those sites, said Doug DuBois, director of membership and education for the Texas Petroleum Marketers & Convenience Store Association. Some of the stores are newer, modern [sites], but others were early model c-stores with gas that don't lend themselves to higher volumes.
The move will definitely strengthen their market share in the area, DuBois told CSP Daily News. It's a strategic purchase for Alon to strengthen their presence in West Texas and New Mexico.
Good Time Stores was founded in 1978 and was the largest c-store retailer in El Paso. Alon anticipates the closing of the acquisition to occur in the second quarter, subject to right of first refusal options in favor of the current fuel supplier (San Ramon, Calif.-based Chevron), receipt of lender consents by the seller and other closing conditions.
Good Time Stores was advised on the transaction by Roundtree Capital Corp.,Santa Barbara, Calif. Roundtree Capital is an investment firm that owns a holding company that holds the equity in Good Time Stores.
With a refinery and pipeline infrastructure, Alon follows what Morris called an integrated strategy, where its retail outlets are strategically located to make the best use of its supply system. The chain's strategy is to continue growth in those areas. Morris said that in certain markets where communities are growing, they expect to invest in new builds; however, in the near term, the company will focus on re-imaging and upgrading current stores, with plans later this year to upgrade all its sites in the Albuquerque market.
We're opportunistic, Morris said. There have been opportunities we've had in the past that we did not move on, but when opportunities arise that [fit our plan], then our strategy is to continue to grow our c-store chain in West Texas.Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.