RICHMOND, Va. — ARKO Corp. has agreed to acquire the retail, wholesale and fleet fueling assets of WTG Fuels Holdings LLC, a Midland, Texas-based c-store operator with 24 company-operated Uncle’s Convenience Stores across western Texas.
The total purchase price for WTG is approximately $140.4 million plus the value of inventory at closing.
The transaction also includes three land parcels and nine independent dealer locations. The company has also agreed to acquire WTG’s 57 proprietary Gascard-branded fleet fueling cardlock sites and 52 private cardlock sites, one of the largest fleet fueling operations in West Texas.
“We are committed to creating value for our stockholders with a systematic, convenience-store focused long-term growth strategy focused on disciplined and accretive transactions,” said Arie Kotler, ARKO’s chairman, president and CEO. “We believe that we add significant value to acquisitions with our excellent integration capacity, which has helped accelerate the pace of dealmaking, which in turn improves our business, creates more efficiencies and funds future growth—a virtuous cycle that we believe sets ARKO apart as a leading convenience store operator and acquirer of choice. Adding these assets to our family of community brands is perfectly aligned with ARKO’s strategy, and we look forward to welcoming WTG employees to our company.”
Uncle’s stores are popular West Texas destinations that anchor their markets with convenient grocery, beer and fresh food options, ARKO said. They are known for their foodservice, including Uncle’s branded fresh food, Hunt Brothers Pizza and Champs Chicken. Some stores also have walk-in beer caves. Uncle’s locations also have very strong diesel sales, which currently comprises more than one-third of their overall fuel volume.
Gascard’s 57 proprietary fleet fueling cardlock sites are located in large industrial areas in West Texas and southeast New Mexico and service a diverse base of customers. Nearly three-quarters of fuel sales by volume at the cardlock locations have been diesel, the company said. In addition, the business issues fuel cards that provide customers access to a nationwide network of fueling sites.
ARKO’s agreement to acquire WTG’s c-store, fleet fueling business and independent dealer locations is its fourth announced acquisition of 2022. Together with the recently announced Pride Convenience Holdings and Transit Energy Group transactions, the acquisition of WTG’s assets highlights the company’s systematic growth strategy designed to increase its cash flow and adjusted EBITDA, it said. ARKO expects the WTG, Pride and TEG to grow the company’s base of convenience stores by approximately 15%, adding more than 200 retail stores and a pipeline of new-build opportunities.
WTG would greatly expand ARKO’s “highly accretive” fleet fueling segment, growing from 183 sites at the end of third-quarter 2022 to more than 290 upon closing.
WTG sold approximately 85.0 million total gallons in 2021 across its stores, fleet fueling and independent dealer locations.
“We believe that Uncle’s stores are great sites, and, importantly, we are strategically using our in-house fleet fueling expertise to grow that segment. We are highly focused on our core convenience-store business and have been very pleased with the performance of the fleet fueling segment and the cash flow it generates,” said Kotler.
ARKO intends to finance the purchase from its own sources approximately $25.4 million of the cash consideration plus the value of inventory and other closing adjustments. It expects the remaining approximately $115 million to be funded by Oak Street Real Estate Capital, a division of Blue Owl Capital, New York, as part of the existing $1.15 billion agreement with the company, according to which Oak Street will acquire certain real estate assets of WTG as part of the transaction. The company would lease such real estate assets from Oak Street.
The closing of the transaction is subject to fulfillment of conditions precedent. There is no certainty that the transaction will close, said ARKO.
ARKO Corp. owns 100% of Richmond, Va.-based GPM Investments LLC and is one of the largest operators of convenience stores and wholesalers of fuel in the United States. Founded in 2003, GPM has grown through acquisitions to become the sixth-largest convenience-store chain in the United States, with approximately 2,950 locations, including approximately 1,350 company-operated stores and approximately 1,600 dealer sites to which it supplies fuel in 33 states and Washington, D.C. Its c-store brands include Fas Mart, Shore Stop, Scotchman, BreadBox, Young's, Li'l Cricket, Next Door Store, Village Pantry, Apple Market, Jiffi Stop, Admiral, Roadrunner Markets, Jiffy Food Marts, E-Z Mart, 1 Stop and TownStar, among others.
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