SAN ANTONIO -- In a blockbuster deal that unites the country's largest refiner with one of the Texas' most ambitious convenience retailers, Valero Energy Corp. has entered an 11-year accord with Susser Holdings Corp.
The deal marks Valero's largest single branded wholesale deal in its history in both volume and store count, and makes it the largest rack fuel marketer in oil-rich Texas.
For Corpus Christi-based Susser, which has filed for an initial public offering (IPO) to become a publicly traded company on NASDAQ and is regarded [image-nocss] as one of the elite convenience store chains in the country, the deal furthers its transformation from an impressive franchisee to a powerful independent brand.
Fielding a network of nearly 700 company-run and dealer sites, Susser earlier this year ended its long relationship as Circle K's largest franchisee and is rebranding its portfolio to Stripes. On the forecourt, Susser has been partnering with a bevy of major oil companies, selling branded fuel from CITGO, Conoco, Shell, Exxon, Chevron and Valero, as well as unbranded fuel, to its nearly 350 independent dealers in Texas.
Under the agreement announced Thursday, Valero will replace CITGO as the primary brand for Susser's 324 company-operated locations. The dealer network will continue to fly multiple brands, including Valero, which flies above about 10 Susser sites, Valero officials said.
We are very excited about partnering with Susser because it is a very well-known and well-respected company, especially in Texas, where it is the state's largest independent convenience-store operator, Ken Applegate, Valero's vice president of wholesale marketing, said in a press release. Susser has a great network of high-quality sites, and we're proud to put the Valero name on these locations.
IPO Implications
Because of its application with the federal Securities Exchange Commission, Susser is barred from commenting on the deal. But achieving a long-term secured fuel contract is likely to further strengthen its position as the SEC reviews Susser's request to raise up to $115 million in an IPO expected to fetch between $16 and $18 a share on NASDAQ.
Sam L. Susser and his family members have been involved in the business for three generations and have built a very strong company, Jay Whitehurst, president and COO of National Retail Properties Inc., told CSP Daily News.
The real-estate investment trust is considered a key strategic partner of Susser's. Last December, it entered into a $170 million sale-leaseback covering 74 retail sites with SSP Partners, a subsidiary of Susser Holdings.
They've surrounded themselves with a spectacular management team, Whitehurst said of the retail chain. They operate a very solid business. One of the things that was most impressive to us was their reduced reliance on gasoline margins.
For Valero, the deal gives the refiner-marketer 3,500 branded wholesale outlets and a total of roughly 5,500 sites in the United States, Canada and the Caribbean. Valero is also the exclusive branded supplier of GPM Investments LLC, operator of the Fas Mart chain in the Mid-Atlantic U.S.
[To learn more about Valero's fuel branding program, click here to register for the On Demand of CSPNetwork's How To Sell Me Valero CyberConference featuring Ken Applegate. To learn more about Susser Holdings' plans post-IPO, watch for the October issue of CSP Magazine.]
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