Mergers & Acquisitions

Right Timing for 7-Eleven-Sunoco Deal: Analysis

More than 6 years in the making, 7-Eleven earns its Stripes, captures western Texas

When the news broke that 7-Eleven Inc. had acquired more than 200 stores from Sunoco LP, something seemed to be missing.

This was not just a case of Sunoco operating 204 random retail sites. Indeed, a deeper probe suggested this was a deal originally intended to happen more than a half-dozen years ago.

When 7-Eleven on Thursday entered into a $1 billion agreement to acquire the rest of Sunoco’s retail holdings across Texas, New Mexico and Oklahoma, it was purchasing the final lot leftover from a much bigger deal.

To briefly recap, 7-Eleven just purchased a coveted network that included the Stripes convenience stores and Laredo Taco Company restaurants operated by a commission agent created in 2018 by Sunoco called Cal’s Convenience Inc. Interestingly, in the news releases surrounding this deal, Frisco, Texas-based Cal’s is never mentioned.

Sussing Out Stripes

Here is the back story to what propelled the first major industry acquisition of 2024.

It begins in 2015, when Sunoco LP acquired Susser Holdings and its Stripes c-stores. In the ensuing years, major oil players were shedding its retail holdings, and in January 2018, Sunoco did the same, selling 1,030 stores in 17 states to 7-Eleven’s parent company, Seven & i Holdings Co. Ltd., Tokyo, for $3.3 billion.

Only three months later, Sunoco created a commission agent called Cal’s to own and operate 207 Stripes c-stores that were not part of the deal with 7-Eleven. Sunoco appointed as Cal’s CEO Jack Whitney, an industry veteran who held stints at Temple, Texas-based CEFCO, as well as with Sanford, North Carolina-based The Pantry and Laval, Quebec-based Alimentation Couche-Tard.

Under the commission-agent model, Sunoco has owned, priced and sold at the sites, paying Cal’s a fixed cents-per-gallon commission. Sunoco also owned about two-thirds of the retail portfolio, collecting fees and rental income.

But why didn’t Sunoco just sell those stores to 7-Eleven in 2018 instead of creating what many consider a complex vehicle?

That’s because the U.S. Federal Trade Commission (FTC) would very likely have blocked the deal. At the time, the 7-Eleven brand was dominant in Western Texas and beyond. But that would begin to change in 2019.

That is when Brentwood, Tennessee-based Delek US Holdings’ (aka Southwest Convenience) entered into an agreement to end its long-term lease with 7-Eleven in western Texas and New Mexico, phasing out the largest lease of the 7-Eleven brand in the United States.

With that portion of stores no longer under the 7-Eleven banner, 2024 became a perfect time for 7-Eleven to renew its interest in that market and to repopulate its brand and Laredo Taco. In addition, considering the growing presence of Yesway in these markets, industry observers do not anticipate any FTC objections.

Based in Irving, Texas, 7-Eleven operates, franchises or licenses more than 13,000 stores in the United States and Canada. In addition to 7-Eleven stores, the company operates and franchises Speedway and Stripes stores and the Laredo Taco Company and Raise the Roost Chicken and Biscuits brands.

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