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Mergers & Acquisitions

Sunoco LP Acquires C-Stores From Speedway, Schmitt Sales

Deal includes wholesale fuel distribution network
Photograph: Shutterstock

UPDATE: Sunoco is acquiring five locations from Speedway: four in Rochester, Whitney Point, Farmington and Fayetteville, N.Y., that operate under the Speedway brand, and one in Johnson City, N.Y., that operates under the Express Mart brand, Sunoco spokesperson Alyson Gomez told CSP Daily News. “All of the sites either already are or will be converted to wholesale distribution sites post close,” she said. The Federal Trade Commission required Marathon Petroleum to divest these sites as a condition to acquire 77 Express Mart c-stores from Petr-All Petroleum Consulting Corp., Syracuse, N.Y., in a deal that closed in November 2018.

DALLAS -- In separate deals, Sunoco LP has completed the acquisition of the wholesale fuel distribution business from Schmitt Sales Inc. and the execution of a definitive agreement to acquire certain convenience-store locations from Speedway LLC. Sunoco will convert the undisclosed number of Speedway c-stores to wholesale distribution sites, it said.

Total consideration for both the Schmitt Sales and Speedway acquisitions was approximately $50 million plus working capital adjustments, said Sunoco.

Neither Sunoco nor Speedway responded to a CSP Daily News request for more details by posting time.

The Schmitt Sales deal also included the acquisition of three Robo Mart convenience stores and fuel distribution to commission marketers and independent dealers in New York, Pennsylvania, Ohio and West Virginia.

Combined, the wholesale fuels businesses distribute approximately 180 million gallons of fuel annually across a network of dealer and commission agent-operated locations in the upstate New York, Ohio, Pennsylvania and West Virginia markets, Sunoco said.

Two of the Robo Marts are in Amherst, N.Y., and one is in Boston, N.Y., according to a report by the Buffalo News.

Peter C. Schmitt Jr. founded Schmitt Sales in 1964. He was a pioneer of the concept of installing fuel equipment at independent grocery stores in exchange for the right to distribute motor fuels and share related fuel profits. The company extended this business model, providing a no-cost opportunity to add a fuel offering to grocers, independent convenience retailers and other retail outlets. From a local fuel distributor, the Buffalo, N.Y.-based company has become one of the largest fuel distributors on the East Coast.

Sunoco's Strategy

The wholesale acquisition is consistent with Sunoco's strategy of using its scale to grow its core fuel distribution business, the company said. The retail acquisitions are more surprising in light of that strategy shift.

Sunoco sold most of its company-operated retail outlets to 7-Eleven Inc., Irving, Texas, closing on the acquisition of about 1,030 Sunoco c-stores in 17 states, mainly in Texas, New York and Florida, in January 2018. It also sold more than 200 Stripes c-stores to a new company, Cal’s Convenience Inc., Frisco, Texas, in April 2018. Sunoco still has approximately 80 company-owned sites (including 54 Aloha Petroleum sites in Hawaii).

Richmond, Va.-based independent investment bank Matrix Capital Markets Group Inc. provided merger and acquisition services to Schmitt Sales, which included valuation advisory, marketing the business through a confidential, structured sale process, and negotiation of the transaction.

Speedway LLC, Enon, Ohio, a subsidiary of Findlay, Ohio-based Marathon Petroleum Corp., has nearly 4,000 c-stores in 35 states, and it is No. 3 in CSP's 2018 Top 202 ranking of c-store chains by number of company-owned retail outlets.

Sunoco LP is a master limited partnership that distributes motor fuel to approximately 10,000 convenience stores, independent dealers, commercial customers and distributors in more than 30 states. Its general partner is owned by Energy Transfer Operating LP, a subsidiary of Energy Transfer LP.

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