FRANKLIN, Tenn. -- Delek US Holdings Inc. said its MAPCO Express Inc. subsidiary has signed an agreement to purchase 107 retail fuel and convenience stores from Calfee Co. of Dalton Inc., for approximately $65 million, excluding inventory.
As reported yesterday in a CSP Daily News Flash, the stores, 71 owned and 36 leased, are located primarily in eastern Tennessee and northern Georgia and operate under the name Favorite Markets. Most of the stores are branded, and fuel is being sold at 104 locations under brands including Conoco, Shell and Marathon.[image-nocss]
With the addition of the 107 Favorite Markets stores, the company will immediately realize certain operating synergies and it expects to increase earnings companywide, it said.
With this agreement, we further strengthen our position in our core markets, building on our recent acquisition of 43 convenience stores in southeast Tennessee and northwest Georgia from Fast Petroleum. These transactions are representative of the opportunities that exist allowing us to continue expanding our retail business within the highly fragmented markets in which we operate, Uzi Yemin, president and CEO of Delek US, said in a statement.
He added for CSP Daily News, We have stores in the Virginia market as well the north Georgia market. It only makes sense for us to try to expand in that area. We are the No. 1 retailer in Tennessee so we are very familiar with the state and the business environment in that area. We expect a great deal of synergies out of this deal.
Yemin also said, based on the company's usual plan, that the stores would probably become MAPCO Marts after several months and that they would most likely keep them under their current fuel branding. And the company is still rebranding the Fast Petroleum stores. The process will be completed this year, he said.
With this acquisition, the company will reach one of its strategic goals: to operate more than 500 stores throughout the country. The company also intends to own the real estate associated with 71 stores.
And although he said there is no magic number of stores the company plans to reach, Delek US will keep growing, Yemin told CSP Daily News. Initially we thought 500 was a good number. We knew nothing about the business. Now that we grew to 500, it makes sense for us to [continue to] grow. We'll work ourselves toward 700, 800, and then we'll see. We like that area. We may grow somewhere else.
Sam Turner, Dalton, Ga.-based Calfee's chairman and CEO, whom Yemin called a true gentleman, told CSP Daily News that while he cannot talk about the deal until it is completed, he is staying in the business. Calfee currently operates 129 stores in Georgia, Tennessee and Alabama under names Favorite Markets and Compac Food Stores, with Chevron, Conoco, Texaco, Shell and Marathon fuels available at 123 locations.
Turner added that he is also staying with the National Association of Convenience Stores as its 2006-2007 chairman and chair of the NACS Executive Committee. NACS has been good to me. I have gotten a lot out of my experience with them, he said.
Delek US said it intends to finance the purchase with a combination of available cash from its initial public offering (IPO) completed in May 2006 and additional borrowings.
The closing is subject to customary closing conditions and government approvals and is expected to close during the company's second quarter.
Franklin, Tenn.-based Delek US is a diversified energy business focused on petroleum refining, marketing and supply and retail marketing. The refining segment operates a high conversion, independent refinery, with a design crude distillation capacity of 60,000 barrels per day, in Tyler, Texas. The marketing and supply segment markets refined products through its terminals in Abilene, Texas, and San Angelo, Texas, as well as other third-party terminals. The retail segment markets gasoline, diesel and other refined petroleum products and convenience merchandise through a network of 394 company-operated retail fuel and c-stores, operated under the MAPCO Express, MAPCO Mart, East Coast, FAST food and fuel and Discount Food Mart names.
The Delek Group, Tel Aviv, which owns 77.4% of Delek US Holdings, is a major investment group in Israel.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.