Arko Petroleum Corp. (APC) announced Thursday that it has agreed to acquire U.S. Petroleum Partners, a fuel distribution company serving the Great Lakes region, in a deal valued at approximately $205 million in cash plus inventory costs.
U.S. Petroleum Partners distributes about 280 million gallons of fuel annually to more than 400 wholesale locations. The deal includes two fuel terminals in Novi, Michigan, and Toledo, Ohio, connected to the Buckeye Pipeline system, as well as a vehicle fleet that transports over 80% of the company’s fuel volumes.
The acquisition marks the first major purchase for Arko since its initial public offering earlier this year and would expand the company’s fuel distribution by roughly 14%.
“We intentionally positioned APC with a strong balance sheet, significant liquidity and financial flexibility so we could pursue accretive opportunities like this one,” Arie Kotler, chairman, president and CEO of APC. “The acquisition aligns closely with APC's investment thesis and is intended to expand our predominantly fee-based and fixed-margin earnings profile while enhancing our cash flow generation capabilities.”
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Arko said the transaction is also expected to strengthen the company's relationships with major fuel suppliers through increased commercial and operational scale and throughput.
“We believe these assets will increase our scale, enhance our infrastructure footprint, deepen our supplier relationships with major oil companies and create multiple avenues for earnings growth through increased throughput, incremental fee-based earnings streams and operational efficiencies,” Kotler said.
Kilpatrick Townsend & Stockton LLP and Holland and Knight are acting as legal counsel to U.S. Petroleum Partners LLC. Raymond James is acting as the financial advisor and Greenberg Traurig P.A. and Julius Schwarz LLC are acting as legal counsel to APC.
GPM Investments is a wholly owned subsidiary of Richmond, Virginia-based Arko Corp. It has more than 1,500 stores under more than 25 regional store brands, including fas mart, Li’l Cricket and Scotchman.
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