Mergers & Acquisitions

Susser's Selective M&A Side

Chain keeps ear to ground for quality operations; avoids cheap, distressed properties
CORPUS CHRISTI, Texas -- Open to growth opportunity, but selective in pulling the trigger--that sums up Susser Holdings Corp.'s opinion of merger and acquisitions in its markets. "There are a number of groups of stores that we think are very well-run, quality operations that we would love to have part of our network," said company president and CEO Sam Susser during a quarterly earnings call late last month. He cautioned, however, that the owners of those well-run sites are likely not willing to accept the low multiples now being offered for business properties.

"In this [image-nocss] environment, asset valuations are clearly coming down fast and hard," Susser said. "And I'm not sure that people who own quality businesses have really adjusted their expectations or they're just not willing to sell at the kind of valuations that are available in today's market place."

And Susser Holdings, which is planning modest growth this year with the construction of between eight and 16 stores, will not sacrifice its standards just for the sake of growing store count and market share. "We do see quite a few distressed properties out there, distressed properties that are cheap," Susser said, "but we're not really enthusiastic about most of those distressed situations because of the quality of the real-estate facilities that are involved. We're very selective on the acquisition side."

Susser pointed to the company's recent integrating of it purchase of the Town & Country chain as an example of how smoothly Susser Holdings can work new stores into its operations. "We feel great about our track record on integrating acquisitions and want to do that in the future as well, but we want it to be great facilities that, once integrated into our business, will help us continue to build same-store-sales growth for years ahead," he said. "So [we're looking for] not just a good buy in year-one, but something that will make sense for 10 to 20 years out."

During the fourth quarter of 2008, Susser Holdings opened five new retail units, bringing the total number of stores built in 2008 to 12. The company closed two smaller retail locations, bringing the total retail store count to 512 as of December 28. One additional store has opened since yearend, and two more are under construction in West Texas.

Susser acquired the Town & Country Food Stores chain on Nov. 13, 2007, adding 168 convenience stores in West Texas and Eastern New Mexico. The transaction was valued at approximately $356 million.

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