Traditionally, there are several factors that push convenience retailers to sell their business: channel refocusing, age and retirement, having no generational succession or no succession plan. The current spate, however, appears to be driven by competition.
“Some owners are simply tired and worn out and simply ready to monetize their business. It is a dramatically changing environment for retailers and distributors, particularly from when they originally began in the business,” said Andrew Weber, principal at Corner Capital Partners, Santa Barbara, Calif. “It has become more competitive, more expensive and requires new business models to think about the next 30 years.”
And industry experts expect this movement to accelerate. “The next three to five years will see this trend continue at an increased rate as operators look to exit/retire while taking advantage of higher multiples being paid for strong assets,” said Ken Shriber, managing director and CEO of Petroleum Equity Group, Chappaqua, N.Y.
While the pandemic was to blame for a slowdown in transactions earlier in the year, the industry is now experiencing an uptick in activity, Shriber said, and the ongoing health crisis now may be sending some chains onto the market. “But many of these owner-operators were already thinking of selling pre-COVID, so the fact that they now want to go to market is coincidental. The C&G [convenience and gas] industry is resilient with margins remaining elevated, and it has not suffered with a sustained lack of sales like other industries. And to my knowledge, there are no stores or chains going out of business. I have not seen any bankruptcies, despite the fact that fuel demand remains suppressed.”
Adds Terry Monroe, founder and president of American Business Brokers & Advisors, Effingham, Ill., “These operators are good operators, and they know it is becoming harder and harder to stay competitive.”
As larger chains expand and consolidate, they bring better economies of scale, he says. Further, high valuations, compelled by “cheap money” in the marketplace, “means you can get more store for your money,” he said. “I have several longtime operators who have 20 stores, 30 stores and 40 stores who have toyed with the idea of selling and now are ready due to the high valuations in the marketplace.”
Facing the Headwinds
Pride C-Stores Inc., a 40-year-old marketer in the Fort Wayne, Ind., area, sold its seven c-stores to Alimentation Couche-Tard Inc., Laval, Quebec, which operates under the Circle K brand. For Richard “Rusty” Parish, president of Columbia City, Ind.-based Pride, the decision to sell was based on several factors, including limited expansion opportunity and the amount of capital needed for chip-card and underground-storage-tank upgrades.
Also, the “significant capex to begin to do food in a manner that would give us the qualified return, and an uncertainty about whether we were capable to compete and in a higher-quality food environment,” he said.
But at 61, Parish said he isn’t “looking for a beach”—that is, retirement. He has no family succession plan in place and will continue to run his car-wash business, and for now, his fuel distribution business. “I don’t think that there’s anything that will bring me back around to the convenience channel,” he said. “I did not sell our fuel distributorship, but I probably will. It’s a declining-margin business.”
Although COVID-19 “changed the landscape,” the pandemic was not a factor in the sale because the deal was already in motion. In fact, 2020 would have been the chain’s best year of the last five, he says. “It wasn’t dire straits or that we were scared. We were doing well. But I just couldn’t forecast that any longer in view of everything that was on the horizon.”
Here are 14 third-quarter 2020 deals involving companies exiting the c-store business ...
1. Regal Oil
Seller: Regal Oil/Star Stop
Buyer: Majors Management
Majors Management LLC has acquired 14 Star Stop convenience stores and a portfolio of dealer supply accounts from Regal Oil Inc., San Angelo, Texas.
Dan Baker, Regal's treasurer and director of operations, told GoSanAngelo that the sale of the c-stores had been in the works for years. COVID-19 slowed the sale, which was finalized on Oct. 8. The sale allows Regal Oil to change its focus. "We're going back to our roots," Baker said. "It was time for us to move on and concentrate on the wholesale side."
2. Buchanan Energy
Seller: Buchanan Energy/Bucky’s
Buyer: Casey’s General Stores
Casey’s General Stores Inc. has agreed to acquire Buchanan Energy, owner of Bucky’s Convenience Stores, in an all-cash transaction for $580 million, including tax benefits valued at $80 million for a net after-tax purchase price of $500 million.
Steve Buchanan, founder and president of Buchanan Energy and Bucky’s, highlighted the strategic alignment between the two convenience organizations. “The acquisition by Casey’s is an exciting milestone in our 40-year history, and I am pleased that Bucky’s will join a top convenience retailer for its next chapter. The addition of Casey’s pizza to our existing high-volume stores will be celebrated by our customers, and our shared Midwestern roots and community values are aligned as we continue to serve our loyal customers.”
3. Schrader Oil
Seller: Schrader Oil
Buyer: EG Group
EG Group has entered into a binding agreement for the acquisition of Schrader Oil in the United States. Schrader Oil, Fort Collins, Colo., currently operates 18 convenience stores and gas stations in northern Colorado.
“We are thrilled to be passing the baton to a highly successful and growth-oriented company in EG,” said Steve Schrader, president of Schrader Oil. “We believe they have the capability to take our success and continue to support our community for many years to come. We believe we have found the best fit for our family, our employees and our community.”
4. Eagle Stops, Ekker Eateries, GJE Enterprises, Sevier Valley Oil
Seller: Eagle Stops, Ekker Eateries, GJE Enterprises, Sevier Valley Oil
Buyer: Parkland USA
Parkland Corp., through its wholly owned U.S. subsidiary Parkland USA, has entered into an agreement to acquire Eagle Stops, Ekker Eateries and GJE Enterprises, which collectively own and operate seven convenience stores in Utah and Colorado. Parkland USA also has acquired the related assets of Sevier Valley Oil Co. Inc. (SVO). The deal will advance Parkland USA’s strategy to expand the On the Run convenience-store brand in the Unites States.
“This acquisition affords us the opportunity to improve the lives of our team members and continue the experiences our guests have day in and day out.” said Nate Houston, co-owner of Eagle Stops.
5. Holmes Oil
Seller: Holmes Oil/Cruizers
Refuel Operating Co., a retail and wholesale fuel distribution and convenience-store business, has entered into an agreement to acquire the assets of Holmes Oil Inc., including the Cruizers c-store chain.
“This transaction is a great tribute to Cruizers great people,” said Edward Holmes, CEO of Cruizers. “This company was built by the amazing store teams, great managers, an extraordinary home office staff and unbelievable senior leaders, to whom I’m profoundly grateful. Refuel is a company of great people who will take Cruizers into an even brighter, ever-changing future. Customer delight has been our mission and they will take it to a new level. Great transition for all.”
6. Pride C-Stores
Seller: Pride C-Stores
Buyer: Alimentation Couche-Tard
Mac’s Convenience Stores LLC, a subsidiary of Alimentation Couche-Tard Inc., has acquired the chain of seven retail convenience stores owned and operated by Pride C-Stores Inc., Columbia City, Ind.
“We worked very hard to build a ‘best-of-class’ chain of convenience stores in northeastern Indiana, and we have been proud to serve our customers in these markets,” Richard “Rusty” Parish, president of Pride C-Stores, said. “We ultimately concluded for a number of reasons that it was the right time to sell.”
7. Red-Kap Sales
Seller: Red-Kap Sales
Buyer: Stewart’s Shops
Stewart’s Shops Corp. will acquire eight convenience stores, three car washes, a more than 75-dealer network and the fuel distribution business from Red-Kap Sales Inc., a Schenectady, N.Y.-based family-run business.
"Being acquired by Stewart’s is our final success. We have had a long and prosperous relationship with Stewart’s, during which we have grown to respect and trust them. We know that we are leaving our employees and customers in good hands and able to face the challenges of the future with Stewart’s and the Dake family. Knowing that Stewart’s is a locally owned family business only adds to our contentment with this transaction. Thank you to everyone who made all of this possible,” said Red-Kap principal Jon Kaplan.
Buyer: Kwik Trip
Kwik Trip Inc. has closed on the purchase of the assets of Stop-N-Go of Madison Inc., which operates 36 Stop-N-Go convenience stores in southern Wisconsin and northern Illinois.
"When selecting the right buyer, it was important for us that the Stop-N-Go brand be continued. All of us at Stop-N-Go have a great deal of pride and sense of accomplishment because our efforts built a brand worthy of continuing under the new ownership of Kwik Trip," said Andrew Bowman, CEO and owner of Stop-N-Go.
9. Putnam Co.
Seller: Putnam/Acorn Markets
Buyer: United Refining Co. of Pennsylvania
United Refining Co. of Pennsylvania (URC) has completed the acquisition of 15 ExxonMobil-branded convenience stores from Acorn Markets Inc. and Putnam Co.
Before the COVID-19 pandemic, Putnam requested Corner Capital’s valuation and strategic advisory services to assist it in scenario planning. Putnam elected to market its 80-year-old business in a structured-sale merger-and-acquisition (M&A) process.“This transaction represents the conclusion of a thoughtful strategic process undertaken in a tumultuous climate,” said Ed Owlett, president and CEO of Wellsboro, Pa.-based Putnam. “Our family and employees are pleased with the end result as 2020 comes to a close.”
10. Burch Oil
Seller: Burch Oil/Burchmart
Buyer: NSR Petro Services
NSR Petro Services LLC (NSR) has purchased Burch Oil Co. Inc.’s portfolio of eight Burchmart convenience stores. Hollywood, Md.-based Burch Oil is exiting the c-store business with the sale.
“The Burch family was extremely proud of the network of convenience stores that it built over the last 34 years and has worked hard to provide our customers with the highest quality offerings and service,” said Kelli Mattingly, director of retail operations for Burch Oil. “It was an extremely difficult decision for our family to sell our retail network, but we concluded that, for a number of reasons, it was the right time to proceed with a sale.”
11. Carter Oil
Seller: Carter Oil
Buyer: Parkland USA
Parkland Corp. has acquired Carter Oil Co., a wholesale and commercial fuel distributor based in Flagstaff, Ariz.
“We liked how Parkland’s values mirrored ours, and this mattered as we looked to sell,” said Paul Carter, president of Carter Oil. “We wanted to make sure our employees are taken care of, and our customers continue to receive the great service they are used to. We are confident this acquisition with Parkland will continue our tradition of putting people first.”
12. Ottawa Oil
Seller: Ottawa Oil/Party Mart
Buyer: Jay Petroleum
Jay Petroleum Inc., which owns and operates 35 Pak-A-Sak convenience stores in northern Indiana and northwest Ohio, has purchased most of the assets of Ottawa Oil Co. Inc., Ottawa, Ohio. The purchase includes fuel transportation, dealer sites, consignment sites and 22 Party Mart convenience stores.
“We are profoundly grateful to our employees and the communities we have had the pleasure to serve,” said Janel Kruse, general manager of Ottawa Oil. “Jay Petroleum’s track-record for serving communities and history as an employee-owned company were very important factors in our selection of them.”
13. Story Distributing
Seller: Story Distributing/Casey’s Corner
Parkland USA has purchased the assets of Story Distributing Co., operators of Casey’s Corner Convenience Stores anda full-line branded wholesaler and retailer of petroleum fuel products in Montana.
“We’ve been rooted in the Bozeman community since 1976, and our employeesare the foundation of our organization. They work very hard every day to serve our customers, and this acquisition with Parkland allows them more advancementopportunities to grow and serve our Bobcat community,” said Dan Alexander, president of Story Distributing.
14. H&M Wholesale
Seller: H&M Wholesale/Max Express
Buyer: Classic Star Group
Classic Star Group LP has acquired the convenience retail, ChevronTexaco- and Shell-branded fuel distribution and commercial business assets of H&M Wholesale Inc. The package included three branded retail stores, 27 branded dealer supply contracts, transportation assets and the commercial business.
In 2019, H&M retained Corner Capital’s valuation and strategic advisory services to identify corporate options for its shareholders. After analysis and consideration, the company elected to pursue a structured sale process for its business assets. “We have had a long and fruitful journey in the industry and look forward to a new chapter as we transition our business to a like-minded neighbor that shares our passion for the business and will take good care of our customers in the Brazos Valley area,” said Mary Walker, owner of H&M Wholesale.