CSP magazine predicted in its February issue that The Pantry might be targeting Alabama for expansion. (Click here to read "Brave [image-nocss] New World: Acquisitions, economic shifts remap the convenience landscape.") As reported in a CSP Daily News Flash, the acquisition, which will include the real estate underlying 32 of the 40 locations, is expected to be funded with cash on hand; 32 of the stores are located in Mobile, Ala., and the surrounding Interstate-10 corridor; six are in Florida and the remaining two are in Mississippi and Louisiana.
The stores operate under a variety of names, including the Flamingo banner, and generated revenues of approximately $189 million during the 12 months ended June, 2008. The acquisition, which is subject to regulatory approvals and other customary closing conditions, is expected to close in the second half of fiscal 2009.
Herndon Oil has 65 units, four under the Fleet Travel, 54 under the Herndon Shell and seven under the Minute Stop banners. The locations offer Shell and unbranded fuel. Foodservice offerings include Checkers and Subway.
"This acquisition fills a gap in our existing store base and represents our initial entry into the attractive Mobile market," said Pantry chairman and CEO Peter J. Sodini. "We expect this transaction to be accretive to our earnings per share in the first 12 months after closing."
Additionally, the company reported that during the second fiscal quarter, it repurchased $26 million in principal amount of its outstanding bonds, consisting of $23 million of its 3% Senior Subordinated Convertible Notes and $3 million of its 7.75% Senior Subordinated Notes, for an aggregate purchase price of approximately $19 million. As a result, the company will include a pre-tax gain of over $6 million on the extinguishment of debt in its financial results for the quarter, which will be reported in early May.
"We believe the repurchase of outstanding bonds at a discount and the pending acquisition both represent high-return investments on behalf of our shareholders and are key steps forward in executing our balanced strategy of reducing debt while growing the business," Sodini said.
Headquartered in Sanford, N.C., The Pantry is the leading independently operated convenience store chain in the southeastern United States and one of the largest independently operated c-store chains in the country. As of April 10, 2009, it operated 1,648 stores in 11 states under select banners, including Kangaroo Express, its primary operating banner. The Pantry's stores offer a broad selection of merchandise, as well as gasoline and other ancillary services designed to appeal to the convenience needs of its customers.
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.