Mergers & Acquisitions

Insider's View: Smaller Deals Show Growth at All Levels

A 3rd-quarter review of mergers & acquisitions and capital markets, part 2

SCOTTSDALE, Ariz. -- Acquisition activity in the third quarter of 2014 by six major convenience store retailers, as reported yesterday, drove home the fact that the industry is consolidating faster than ever. However, smaller merger-and-acquisition deals across the country show there are plenty of opportunities to grow outside of the major retailers.

convenience store mergers & acquisitions

Here’s a digest of noteworthy deals:

Notable M&A Transactions

  • Fortress Investment Group. Fortress Investment Group, a New York-based investment management firm, acquired United Oil Co., consisting of approximately 130 sites in the Los Angeles and San Diego metropolitan markets, including 40 kiosk-style operations. United is also a distributor of Shell, ConocoPhillips/76 and Valero brand fuel in Southern California and delivers fuel to approximately 100 dealer sites. Although the purchase price was not disclosed, it was rumored that the price approached $500 million. Joe Juliano, former group president of Orange, Calif.-based SC Fuels, was named president and chief executive officer of United Oil.
  • Petroleum Marketing Group Inc. Woodbridge, Va.-based Petroleum Marketing Group Inc. (PMG) closed on the acquisition of 13 convenience stores, a large number of fuel supply contracts and related assets formerly owned and controlled by Ocean Petroleum Inc. and its affiliates. The sites and accounts are located on the East Coast from northern New Jersey to Virginia.
  • Empire Petroleum Partners LLC. Empire Petroleum Partners LLC, Dallas, acquired the retail dealer business of Mansfield Oil Co. of Gainesville Inc. and has merged it into Empire, effective Sept. 25. Mansfield will also become a partner of Empire and will retain an ownership stake in Empire. The combination of Empire and Mansfield will create a national dealer-focused fuel distributor that services more than 1,100 accounts in 26 states in the U.S.

Growth Initiatives

  • Atlas Oil Co. Atlas Oil Co. of Taylor, Mich., announced the acquisition of the portfolio of Dennis Trigg, formerly with Kendrick Oil, in the greater Houston area. Atlas acquired 80 fuel customers, including traditional commercial and retail business, as well as rack sales and contracted customers, with a current consumption volume of 50 million gallons per year.
  • The Spinx Co. The Spinx Co. acquired seven convenience stores in and around its home of Columbia, S.C., from 7-Eleven Inc. NRC Realty & Capital Advisors represented 7-Eleven in connection with the transaction.
  • Wawa Inc.Wawa celebrated the opening of its 50th store in Florida, with 31 in the Orlando market and 19 in the Tampa market, and plans to open nine more stores by the end of this year. Wawa also announced plans to open an additional 50 stores in Florida within the next two years at the rate of 25 per year, spread throughout the Orlando, Tampa, southwest Coast and Daytona markets.
  • Stop & Go Stores. Stop & Go Stores, Toledo, Ohio, acquired 11 In & Out convenience stores from In & Out Mart Inc. Most of the stores are located in the Toledo market. Stop & Go has announced a goal of reaching 100 sites within the next five years.
  • Casey’s General Stores Inc.Casey’s General Stores Inc., Ankeny, Iowa, announced that it has 29 new stores and 24 replacement stores under construction, and is in the process of integrating the 24-store Stop-N-Go acquisition in North Dakota. The company expects to open between 72 and 108 new and acquired stores by the end of its fiscal year.

Divestiture of Non-Strategic Assets

  • RaceTrac Petroleum Inc. RaceWay, a subsidiary of RaceTrac Petroleum Inc., announced the sale of 18 nonstrategic sites in eight states. All of the sites except one are owned in fee by the company, and the sites are being sold without convenience store or fuel branding. NRC Realty & Capital Advisors has been retained by RaceWay to coordinate the sale.
  • Black Oil Co. Black Oil Co., based in Monticello, Utah, has decided to exit the convenience-store business and has sold its five Out West Food & Fuel Stores to Resort Retailers Inc., an authorized 7-Eleven franchisee. Resort Retailers Inc. now operates 20 convenience stores with gasoline.

Conclusion

The merger-and-acquisition transaction activity thus far in 2014 make it clear that the consolidation of the convenience-store industry is increasing at a rapid pace, and that the larger players—the MLPs and the major owner/operators—are the primary beneficiaries of this process.

The recently publicized transactions have made operators who have previously not seriously considered selling their business now take another look at a potential sale in light of the significant premiums being paid in the current environment.

The current state of the capital markets, with low interest rates and plentiful capital for acquisition, continues to keep the acquisition process going at a fast pace.

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