Mergers & Acquisitions

GPM Restructures Ownership

Deal will help Kotler execute strategy of both acquisitions and new-store growth
gpm csp

RICHMOND, Va. — Convenience-store owner and operator GPM Investments LLC has announced an ownership restructuring that it says will allow the company to speed up its growth. GPM and its controlling shareholder, Israeli public holding company Arko Holdings Ltd., have entered into a letter of intent for a business combination with Haymaker Acquisition Corp. II, a New York-based publicly traded special-purpose acquisition company.

Under the terms of the proposed transaction, the enterprise value of the combined company is approximately $1.5 billion.

The combination would result in 100% of GPM and Arko combining with Haymaker with substantial rollover from existing equityholders. Currently, Arko owns 68% of GPM. The remaining 32% is held by Davidson Kempner Capital Management LP, funds managed by Ares Management Corp. and Harvest Partners SCF LP.

As part of the proposed transaction, the shares of Arko will be de-listed from the Tel-Aviv stock exchange and listed on Nasdaq in the United States. At the closing of its business combination with Haymaker, Arko will have no material independent operating activities, income or net assets.

Based in Richmond, Va., GPM was founded in 2003 with 169 stores and, since Arko acquired control in 2011, has grown through acquisition to become a major c-store operator with 1,400 locations in 23 states comprised of 1,272 company-operated stores and 128 additional sites to which it delivers fuel.

The company operates in three segments: retail, which consists of fuel and merchandise sales to retail consumers; wholesale, which supplies fuel to third-party dealers and consignment agents; and GPM Petroleum, which supplies fuel to company stores as well as independent operators and bulk purchasers.

“We have a demonstrated history of profitable growth and a track record of executing consolidation opportunities,” said Arie Kotler, CEO of Arko and GPM. “Combining with Haymaker as a Nasdaq-listed, pure-play operator of convenience stores greatly enhances our ability to execute our growth strategy in a large, growing, recession-resistant industry, while driving value for our combined shareholders.”

The combined company will be led by GPM's current management team, including Kotler.

Kotler, who told CSP Daily News that he has no intention of leaving GPM Investments, said, “This will help us with a lot of potential growth. As you know, we’ve been big on acquisitions and haven’t done a lot with raze-and-rebuild [or new-build] expansion. This will change that.”

Arko and GPM will also benefit from Haymaker's investing and operational experience at Fortune 500 companies, particularly in the consumer and hospitality sectors, the companies said.

“The proposed transaction with Arko and GPM meets all of the strategic criteria we developed for Haymaker,” said Steven Heyer, CEO and executive chairman of Haymaker. “This is a sizeable transaction at approximately $1.5 billion in enterprise value, with a business that has scale, geographic diversity and significant growth opportunities, led by Arie and a strong management team with public market experience. We intend to continue growing the GPM platform and to pursue strategic initiatives jointly with Arie, a proven consolidator and operator. The structure of the proposed business combination is also appealing—we expect long-term institutional investors and management to roll over significant equity at an attractive valuation relative to U.S.-listed peers.”

The companies will announce additional details regarding the proposed business combination when they execute a definitive agreement, which they expect will occur in the third quarter of this year, with a closing anticipated before the end of the year.

Haymaker is a $400 million blank-check company formed for the purpose of entering into a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. Its acquisition and value creation strategy is to identify, acquire and, after its initial business combination, build a company in the consumer, retail, media or hospitality industries.

Raymond James & Associates Inc. is serving as financial and capital markets advisor, Cantor Fitzgerald & Co. is serving as capital markets advisor, Stifel, Nicolaus & Co. Inc. and Citigroup Global Markets Inc. are serving as co-financial advisors and capital markets advisors and DLA Piper LLP (US), Gornitzky & Co. and Ellenoff Grossman & Schole LLP are serving as legal advisors to Haymaker. Greenberg Traurig LLP and S. Friedman & Co. are acting as legal advisors to Arko and GPM.

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