Wholesaler retakes retail arm in Global’s buyback of Alliance
WALTHAM, Mass. -- Global Partners’ move to acquire Alliance Energy and its 542-store portfolio is the story of a major Northeast fuel wholesaler reclaiming its retail history.
The value of the deal, as reported in a CSP Daily News Flash yesterday, is approximately $296 million, with a 60-40 split of bank debt to equity. Based on the purchase price and current operating and anticipated performance of the Alliance business--as well as current and anticipated general economic, industry and market conditions--Global has calculated an expected cash return, “prior to financing costs, in the low-to-mid-teens in the first full year of operation.”
Based in Waltham, Mass., Alliance’s portfolio includes 542 gasoline stations in New England, New York, New Jersey and Pennsylvania. Alliance either owns or has long-term leases on 257 sites and has supply contracts for the remaining 285 sites. The stations operate under a variety of brands, including Mobil, Exxon, Shell, Sunoco, Gulf and CITGO.
Alliance is approximately 95% owned by members of the Slifka family, who also own the partnership’s general partner, Global. What started out as a family business more than 80 years ago grew into a massive regional network of terminals and petroleum supply, with Global building to a storage capacity of 10 million barrels.
The company grew over the years to acquire gasoline stations and convenience stores with what would become Alliance, a retail arm that was sold off more than 10 years ago. In the interim, Alliance would get in on many of the selloffs of Houston-based ExxonMobil sites and moved to become the management partner when Global itself bought 221 ExxonMobil locations a year and a half ago.
“Building on the success of our 2010 acquisition of the Mobil assets, this transaction creates additional vertical integration between our supply, terminaling, wholesale business and our expanding portfolio of gas-station sites,” said Eric Slifka, president and chief executive officer of Global Partners. “We know Alliance and its business extremely well, as they currently serve as the management company for Global’s Mobil assets. We view the company as an ideal fit for Global--strategically, operationally, geographically and culturally.
“With a total portfolio of more than 750 gas stations post-acquisition, our combined gasoline distribution, gasoline station and related convenience-store business will provide a strong, stable source of cash flow and further establishes Global Partners as one of the leading gasoline wholesalers, distributors and operators in the Northeast,” Slifka said.
The terms of the transaction were unanimously approved by the board of directors of Global GP LLC, based on the unanimous approval and recommendation of the board’s conflicts committee, which is composed entirely of independent directors.
In preparation for the closing of the transaction, Global Partners plans to increase the acquisition segment of its revolving-credit facility by approximately $100 million. Upon closing, Alliance President Andrew Slifka will join Global Partners as president of the partnership’s retail business, including its existing Mobil assets. In addition, he will become a member of the board of Global GP LLC.
“We value the financial and operational growth that Alliance has enjoyed under Andrew's leadership, as well as the excellent work that he and his management team have done in managing the day-to-day operations of our Mobil retail gas stations,” Eric Slifka said. “Over the past 15 years, Alliance has created an outstanding asset base in the Northeast through acquisitions and organic growth, and we expect to build on that success.”
Of the 542 Alliance stations, 234 are located in Connecticut, 109 in Massachusetts, 67 in Pennsylvania, 48 in Maine, 46 in New Hampshire, 23 in New York, 12 in Rhode Island, two in Vermont and one in New Jersey.
Of the owned and leased sites, Alliance operates 81 of the stations, and 176 are operated by dealers and commissioned agents. The remaining 285 sites are gasoline-supply contract arrangements.
Of the 81 Alliance-operated stores, most of the stations have convenience stores and feature co-branding arrangements with national retail chains such as Dunkin’ Donuts and Subway. Alliance’s maintenance capital expenditures are approximately $4 million annually.
“We look forward to welcoming the Alliance team to the Global family and continuing to build our businesses together,” Eric Slifka said.