COLUMBIA, S.C. -- After dipping its toe in the American market with only a handful of convenience stores in the United States, Dublin-based Applegreen PLC is taking a bigger plunge and has agreed to acquire the assets of The Brandi Group, which operates the 42-unit Pitt Stop convenience-store chain based in Columbia, S.C.
Applegreen will acquire the trade and certain assets of Bob Brandi Inc. and Bob Brandi Stores Inc. for $5.4 million, including working capital, and an unnamed U.S institutional real-estate investor will acquire the properties for $70.1 million. Applegreen will enter into a long-term agreement with the investor to lease the property assets. The companies said that they expect to complete the deal, which is subject to closing conditions, in fourth-quarter 2017.
"We are delighted to announce our first major acquisition in the U.S., which represents a significant milestone for our business,” said Applegreen CEO Bob Etchingham. “We believe that this acquisition represents an opportunity to establish a significant presence in this market while also providing the potential for us to leverage our retail experience in this sector to enhance the current offering. It also represents an ideal platform from which to further pursue our strategy for growth along the East Coast of the U.S."
Here are more details on Applegreen’s U.S. invasion …
Ahead of this Palmetto State acquisition, Applegreen has 155 c-stores in Ireland, 77 in the U.K. and 14 in the United States. Applegreen subsidiary Petrogas Group US Inc., Plainview, N.Y., operates the U.S. sites.
The company opened its first U.S. locations in 2014 in Plainview and Hicksville, N.Y., on Long Island. It has since added three additional sites on Long Island, in Amityville, Hempstead and Islip.
In 2016, Applegreen signed an agreement with fuel distributor CrossAmerica Partners LP, Allentown, Pa., to take over nine sites in the Massachusetts area on a leasehold basis. It also signed an agreement with 7-Eleven Inc., Irving, Texas, to operate the Hempstead store as a 7-Eleven franchisee, with an Applegreen forecourt.
The 42 Pitt Stop sites are located in or near Columbia; 34 of these sites are gas stations that incorporate 11 Burger King restaurants and a number of other food offers including Subway and Blimpie. The business also operates eight stand-alone Burger King sites.
“We consider the Brandi Group to be an excellent fit for our business given the attraction and convenience of its locations centered in the city of Columbia, together with the significant component of food-to-go offers that exists within the estate,” Etchingham said.
“Applegreen is a hybrid group with outstanding forecourt and food-to-go capabilities in Ireland, which are now being exported to the United Kingdom and the United States,” Clive Black, head of research at Applegreen’s broker, U.K.-based independent investment group Shore Capital, told CSP Daily News. "Management is considered, careful but also ambitious, and Bob Brandi's business provides another foundation, building upon the toe in the water in the Northeast, for Applegreen to gradually expand across the Atlantic."
The current owner has committed to working with the existing management team for the first 12 months to ensure an orderly transition of operations to Applegreen. The company will supplement existing resources with additional Applegreen finance and operational personnel to ensure a successful integration.
“We would expect Applegreen to take its time to learn about and carefully integrate in South Carolina and in time selectively expand further,” said Black. “Brandi also brings with it food-to-go partners that we would expect Applegreen to work with further, too, whilst expansion continues too across the Atlantic, in its home market and across the U.K.”
Palmetto State legacy
Bob Brandi, president and founder of Brandi Cos., began serving South Carolina’s Midlands region in 1974 when he became a Texaco dealer and operated a two-bay gas station in Columbia as a mechanic returning from military service. He built a small c-store, named it Pitt Stop, and opened in 1980 as the first open dealer for Texaco. Since then, he has expanded with the Shell, Exxon, Mobil and Sunoco brands. Quick-service restaurant (QSR) brands include Burger King, Subway, Blimpie, Chester’s Chicken and YoFresh.
“Bob Brandi has created a very strong franchise in the Columbia gas and food-to-go market,” said Black of Shore Capital. “That he has chosen Applegreen as a vehicle through which to sell and take forward his legacy in South Carolina is the measure of the mutual respect that both parties have for each other.”
Applegreen has been looking to secure leasehold sites in the United States, Etchingham told The Irish Times in May. That strategy would minimize capital investment as it grows its U.S. portfolio. He said the company was in talks with “two to three” U.S. companies, but declined to identify them.
Before the current acquisition, the company had been focusing on New England, and it has “made very good progress in generating further opportunities to grow in that region,” Daniel Kitchen, chairman of Applegreen, said in a May press release. “We have added to our management team to cater for the growth planned in that region.”
Etchingham told the newspaper, “We’ll be taking property on a leasehold basis from partners who want a large, professional, corporate operator like ourselves to run their business. We’ll share some of the margin with those parties. That’s how we entered the market, and that’s how we see ourselves continuing for the moment. [But] we never rule out the prospects of an acquisition coming along that we consider to be attractive and that would allow us to add value.”