EL DORADO, Ark., and WHITEHOUSE STATION, N.J. — Murphy USA has agreed to acquire QuickChek Corp. in an all-cash transaction for $645 million. The acquisition will help Murphy USA enhance its food and beverage offer, it said.
“QuickChek represents a truly distinctive business in a class shared by only a few comparable industry peers,” Murphy USA said in making the announcement.
“In October we outlined an updated capital allocation strategy and committed to improving our food-and-beverage offer at existing and future sites,” said Murphy USA President and CEO Andrew Clyde. “This transaction greatly accelerates those efforts and benefits and is expected to provide reverse synergies across our network, while enhancing future returns on new stores. The transaction is also expected to create direct synergies that leverage our enterprise scale and our distinctive capabilities in fuel, tobacco and loyalty. We are excited to join forces with an exceptional and highly engaged team at QuickChek who share Murphy USA’s passion for delivering excellence every day to all our stakeholders.”
Founded in 1967 as an extension of Durling Farms, a door-to-door milk and fresh dairy products delivery service that originally opened in 1888, it is a family-owned chain of 157 stores located in central and northern New Jersey and the New York metro area. It operates a food-and-beverage model with a strong regional brand and engaged customer following, offering quick-service restaurant (QSR)-style food along with convenience items; a high-volume fuel offer is included at 89 of its newest stores.
The company has “robust” per-store, per-year merchandise sales of $3.5 million, combined merchandise margins of 38% with food and beverages representing more than 50% of the mix, and per-store, per-year fuel gallons of 3.8 million. Additionally, QuickChek has a history of same-store-sales growth and a real estate pipeline to sustain unit growth within its existing footprint.
The acquisition is consistent with Murphy USA’s updated capital allocation strategy as announced in October. The deal will complement other ongoing value creation mechanisms, including productivity improvement initiatives, organic growth, share repurchase and a dividend, the company said.
“QuickChek and Murphy USA both reflect a family heritage and a strong people culture,” said QuickChek CEO and Chairman Dean Durling. “I am thrilled by Murphy USA’s commitment to honor our legacy and preserve our brand while learning from our business model. I am proud of what we have accomplished in making QuickChek what it is today, and I am excited about the opportunities for continued growth and success in the next chapter in QuickChek’s journey. I know QuickChek’s dedicated employees and valued customers remain in good hands.”
The purchase price includes expected tax benefits valued at $20 million for a net after-tax purchase price of $625 million. The transaction will be financed with a combination of cash on hand, existing credit facilities and new debt, and Murphy USA has obtained committed financing from the Royal Bank of Canada.
The net investment of $625 million represents a multiple of 13.2 times QuickChek’s estimated last 12 months (LTM) October 2020 adjusted EBITDA of $47 million. Annual run rate synergies of $28 million are expected to be achieved by the third year. When taking into account expected run-rate synergies and tax benefits, the acquisition reflects a multiple of 8.3 times estimated LTM adjusted EBITDA. The acquisition is projected to be accretive to earnings in 2022, the first full year of combined operations.
The transaction is expected to close during the first quarter of 2021, subject to customary closing conditions and regulatory approval.
QuickChek is a market leader in foodservice providing local one-stop shopping featuring made-to-order subs and sandwiches, coffee, snacks and salads, hot breakfast and more. Based in Whitehouse Station, N.J., the family-owned company operates 157 c-stores stores including 89 locations with fuel in New Jersey, New York’s Hudson Valley and Long Island.
Murphy USA is a leading retailer of gasoline and convenience merchandise with nearly 1,500 sites located primarily in the Southwest, Southeast and Midwest. The El Dorado, Ark.-based company and its team of nearly 10,000 employees serve an estimated 1.7 million customers each day through its network of retail gasoline stations in 25 states. The majority of Murphy USA's sites are located in close proximity to Walmart stores. The company also markets gasoline and other products at standalone stores under the Murphy Express brand.