LUFKIN, Texas -- Get bigger or get out. These are the two options many smaller convenience store retailers/jobbers are facing in the current economic climate. And as reported yesterday, Polk Oil Co. cemented its place in the get bigger camp with the announcement this past weekend that it had purchased Land O' Pines Inc., nearly doubling the c-store chain's size.
About 18 months ago, we set forth on what we thought was a very aggressive plan on growing our business through acquisitions, Polk Oil president Carl Ray Polk Jr. told CSP Daily News. New-to-industry [image-nocss] locations are goodand we have put three new sites on board in the last three yearsbut we're a 70-year-old jobbership that recognizes clearly that you've got to get in that 60-million to 70-million-gallon range or give consideration to divesting.
After several months of negotiations, Polk Oil acquired Land O' Pines and its subsidiariesOkay Food Stores and Mr. Payrollon Friday, March 10. The purchase also included a small juice bottling plant, which Polk promptly resold to a group of local investors. Land O' Pines was founded in 1946 by a group of local businessmen and has remained a closely held family business for the past 60 years.
Polk said he initially approached Land O' Pines' owners, absentee owners based in Dallas who had little to do with running the chain's 13 c-stores, to get the negotiation process started. Several of the stores fall in our current marketplace, which made them a good fit for Polk Oil, which had 16 c-stores under the Polk's Pick It Up banner prior to the purchase.
With the acquisition, Polk Oil's operation grows to 29 c-stores, 24 branded dealer locations (ExxonMobil and Valero), three Subway franchises and three Mr. Payroll check-cashing locations. "I am extremely proud of this recent acquisition, said an obviously pleased Polk. It's long-awaitedand it's certainly the largest acquisition we've ever done.
Polk said some of the stores will undergo a name change, depending on the area of the East Texas market they are in, and some of the 29 stores may eventually be sold off. In areas where we currently don't have market share, we're going to pretty aggressively place those [Okay Food Stores] under our chain name, Polk said. We anticipate changing those stores over to Polk's Pick it Up within the first 60 days. We'll then reevaluate the markets where we overlap. We're going to look at some of our underperforming stores both in our network and theirs and determine whether or not we want to flip those to dealers or potentially they could go dark in one or two instances.
Once those stores are integrated into the Polk Oil system, more acquisitions could be on the horizon as the company aims to achieve that 60-million to 70-million-gallon range. We went into this plan 18 months ago with about a three-year plan to both grow through our wholesale side, as well as our retail company-ops. And as long as the market continues to be somewhat stable, we intend to try to grow, Polk said. Depending on your geographical location, the days of running 20 million to 30 million gallons are going to become fewer and fewer. Prior to the Land O' Pines purchase, Polk Oil was doing about 40 million gallons in volume.
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