IRVING, Texas — In a deal that combines the No. 1 and No. 3 U.S. convenience-store chains, 7-Eleven Inc. has entered into an agreement to acquire Speedway LLC from Marathon Petroleum Corp. As reported in a CSP Daily News Flash yesterday, the $21 billion transaction includes approximately 3,900 Speedway stores in 35 states.
“This acquisition is the largest in our company's history and will allow us to continue to grow and diversify our presence in the U.S., particularly in the Midwest and East Coast,” said Joe DePinto, president and CEO of 7-Eleven.
7-Eleven’s biggest deal previously was the January 2018 acquisition of approximately 1,030 convenience stores in 17 states from Sunoco LP, Dallas.
The benefits of the Speedway acquisition, according to 7-Eleven, include:
- Accelerates growth and diversification. The acquisition accelerates 7-Eleven's growth trajectory and diversifies its U.S. presence, the company said. Speedway and 7-Eleven have complementary geographic footprints with little overlap. 7-Eleven has more than 9,800 stores in the United States and Canada, and this acquisition will bring 7-Eleven's total number of stores to approximately 14,000 in the United States and Canada. 7-Eleven will have a presence in 47 of the top 50 most populated metropolitan areas in the United States, “positioning the company as a clear industry leader in a fragmented industry with favorable macroeconomic trends,” it said.
- Strengthens financial profile. Speedway, with annual pre-synergy run-rate EBITDA of approximately $1.5 billion prior to the acquisition, is an “exceptional business with significant opportunities for future growth,” 7-Eleven said. 7-Eleven expects to achieve $475 million to $575 million of run-rate synergies through the third year following closing, while maintaining financial flexibility and a strong balance sheet. Upon closing, “7–Eleven will be even better positioned to continue to pursue profitable growth opportunities,” it said.
On a pro forma basis, the transaction reflects an EBITDA multiple of 7.1x after taking into account expected effects from the transaction, including $475 million to $575 million of run-rate synergies, $3 billion of tax benefits and $5 billion of net sale-leaseback proceeds.
The company expects the transaction to produce compound annual growth in 7–Eleven's operating income and EBITDA of more than 15% through the first three years following the close of the acquisition. 7-Eleven expects to reduce its debt-to-EBITDA ratio to less than 3.0x within two years following the close of the acquisition, it said.
- Enhances economies of scale.The combined store network also enhances economies of scale, 7-Eleven said. Upon closing, 7-Eleven and Speedway will share best practices to deliver products and promotions based upon customer demand. The combined company will be well-positioned to maximize efficiencies and optimize relationships with vendors and business partners, 7-Eleven said.
The transaction is subject to customary regulatory approvals and closing conditions and is expected to be completed in the first quarter of 2021. 7-Eleven plans to form an integration steering committee with representatives from the leadership of both 7–Eleven and Speedway.
Findlay, Ohio-based Marathon Petroleum is an integrated downstream energy company. It operates 16 refineries, and its marketing system includes approximately 7,800 branded U.S. locations, including about 5,600 Marathon-branded retail outlets. It also owns Enon, Ohio-based Speedway and the general partner and majority limited partner interest in midstream marketing company MPLX.
Based in Irving, Texas, 7–Eleven operates, franchises or licenses more than 71,100 7-Eleven convenience stores in 17 countries, including approximately 11,800 in North America.