2018 Midyear Report: Top 5 M&A Deals

By 
Greg Lindenberg, Editor, CSP

merger ahead

CHICAGO -- The year 2018 began with a mergers-and-acquisitions bang—in January, 7-Eleven Inc. wrapped up its biggest deal ever, closing on the acquisition of more than 1,000 convenience stores from Sunoco LP. The deal was announced in 2017.

And in April, GPM Investments LLC closed on its acquisition of 273 c-stores in Texas, Oklahoma, Louisiana and Arkansas from E-Z Mart Stores Inc., a deal announced in December.

Those are tough acts to follow, but the year so far has not been lacking in other sizable deals that are changing the face of the c-store industry dramatically.

At the halfway mark of the year, here’s a rundown of those major M&A transactions and other notable deals …

1. EG Group buys Kroger’s c-stores

In October 2017, The Kroger Co., Cincinnati, said that it would explore strategic alternatives for its convenience-store business, including the potential sale of the nearly 800-unit network, as part of its new Restock Kroger strategy.

In February 2018, Kroger and EG Group, a retailer based in Blackburn, Lancashire, United Kingdom, signed a definitive agreement for the sale of the c-store unit to EG Group for $2.15 billion. The stores operate in 18 states under the names Turkey Hill, Loaf 'N Jug, Kwik Shop, Tom Thumb and Quik Stop. The deal closed in April.

  • Click here for the c-store industry’s reaction to the deal.

EG Group, which previously had no U.S. retail presence, will continue to operate the c-stores under those banners. This will immediately establish EG Group as one of the 10 largest c-store chains in the United States.

The company, which has more than 2,600 sites in European markets, has partnerships with global brands such as Esso, BP, Shell, Carrefour, Louis Delhaize, SPAR, Starbucks, Burger King, KFC and Subway. It has signaled that it will continue to use that strategy in the United States.

2. Marathon Petroleum acquires Andeavor

marathon

In 2017, it looked like Marathon Petroleum Corp. was on its way out of the convenience-store business. After a strategic review, not only did Marathon keep its Speedway c-store chain, but the refiner-marketer also expanded its retail footprint.

Its $23.3 billion acquisition of refiner-marketer Andeavor, announced in April 2018, created the nation’s largest refiner by capacity and nearly doubled the size of Marathon's c-store portfolio. The deal spans the continent, adding Andeavor’s presence in the Western United States to Marathon's presence east of the Mississippi.

Findlay, Ohio-based Marathon sells Marathon-brand gasoline through about 5,600 independently owned retail outlets in 20 states and the District of Columbia. Enon, Ohio-based Speedway owns and operates about 2,740 c-stores in 21 states. Speedway ranks No. 3 in CSP's 2018 Top 202 list of U.S. c-store chains by number of company-owned retail locations.

Before the transaction, San Antonio-based Andeavor ranked at No. 7 on the list. Its retail marketing system included more than 3,200 outlets with fuel brands such as Arco, SuperAmerica, Shell, Exxon, Mobil, Tesoro, USA Gasoline and Giant. About 1,100 of those were company-owned locations. The combined company will have about 4,000 company-owned and -operated locations and about 7,800 branded retail locations.

The companies said they expect to close the transaction in the second half of this year.

3. Cal’s Convenience makes its debut

stripes

An offshoot of the deal between 7-Eleven and Sunoco has brought another new name to the convenience-store game. In April, a newly formed company, Cal’s Convenience Inc., acquired 207 Stripes c-stores in West Texas, New Mexico and Oklahoma that were not included in the $3.1 billion deal between the top chains.

The company has entered into a commission-agent agreement with Sunoco “to own and operate the business” of the stores, effective April 1, according to Jack Whitney, president and CEO of Cal’s Convenience, Frisco, Texas. Whitney is the former vice president of retail operations for Sunoco and Stripes. Previously, he was vice president of store operations for CEFCO Convenience Stores, Temple, Texas, and was a division vice president at The Pantry before it was acquired by Alimentation Couche-Tard.

The deal will put Cal’s Convenience among the Top 40 c-store chains in the United States in the CSP’s 2019 Top 202 ranking (click here for the 2018 list).

4. Speedway acquires Express Mart

express mart

In addition to the Marathon Petroleum-Andeavor deal, in mid-April, Marathon’s Speedway LLC signed an agreement for the purchase of 78 convenience-store locations owned by Petr-All Petroleum Corp., Syracuse, N.Y. The company is No. 82 on CSP’s 2018 Top 202 list of U.S. c-store chains by number of company-owned retail outlets.

The c-stores are located primarily in the Syracuse, Rochester and Buffalo markets in New York and operate under the Express Mart brand. Following the acquisition, the stores will be rebranded to Speedway, the company said.

The companies said they expect to close the transaction by the end of third-quarter 2018.

5. H&S Energy acquires Tower Market

tower market

In early January, H&S Energy LLC purchased 50 convenience-store sites in Northern California from Tower Energy.

The former Tower Market sites in the Sacramento and East Bay areas have been rebranded as Power Market and Extra Mile, according to H&S Energy Executive Vice President Julie Jackson.

Orange, Calif.-based H&S Energy LLC operates 100 c-store locations in California under the Chevron, Extra Mile, Shell and Power Market brands.

Torrance, Calif.-based Tower Energy previously owned 30 retail grocery and gas stores in Northern California that are leased to a Chevron dealer. It also operates its own locations in Southern California.

Other notable deals

jiffy mart

Numerous other notable deals involving fewer than 50 stores have occurred in first-half 2018: