One week after questioning why TravelCenters of America would not consider its competing offer to acquire the company, Arko Corp. got its answer today when TA’s board of directors "reaffirmed that Arko’s proposal is neither a superior proposal nor could it reasonably be expected to lead to a superior proposal."
In response to investor pressure, TA and its board took the time to conduct due diligence on Arko's offer, TA said, and has concluded it will move forward with a previously announced merger with bp.
Since Arko Corp., parent company of convenience retailer GPM Investments, pressed TA April 17 to engage with Arko about its $92-per-share offer, TA requested and received a contractual waiver from bp Products North America Inc., engaged with Arko Corp. and again found the offer lacking, TA announced this morning.
Instead, “the board reconfirms its recommendation that shareholders vote for TA’s pending merger with bp, which, subject to shareholder approval, is scheduled to close on May 15, 2023.”
The discussions came after some TA investors—including TIG Advisors LLC, which owns near 5% of TA—encouraged TA to engage with Arko before moving forward with bp’s $86-per-share deal.
“Simply put, TA shareholders deserve to seek maximum value for the company they own,” TIG said in a letter to the board, “and the board should not stand in the way of that value creation.”
During the engagement with Arko, TA said, it confirmed that Arko plans to finance its proposed $2.4 billion acquisition of TA through an amalgamation of uncommitted funding sources, including by entering into unnegotiated new and expanded credit facilities, entering into unnegotiated sale and leaseback transactions at unrealistic high real estate valuations and using unavailable TA cash.
Richmond, Virginia-based Arko told CSP it is reviewing TA's response this morning.
- BP is No. 7, GPM is No. 6 and TravelCenters of America is No. 29 on CSP’s Top 40 update to the 2022 Top 202 ranking of U.S. convenience-store chains by company-owned store count. Watch for the updated list in June.
Furthermore, TA said, “Arko unequivocally stated that, even if it was granted access to more diligence, it did not plan to obtain a committed bridge loan to close a transaction with TA. Arko also confirmed that its discussions with an insurance provider were preliminary and that it did not know the costs to obtain such a policy.”
A special meeting of shareholders to approve the pending acquisition of TA, Westlake, Ohio, by bp is scheduled for Wednesday, May 10.
Under the terms of the pending transaction, London-based bp will acquire all of the outstanding shares of TA common stock for $86 per share in cash. The transaction price represents an 84% premium to TA’s average trading price of $46.68 over the 30 days ended Feb. 15, 2023, the date the bp merger agreement was signed. The total equity value of the transaction is approximately $1.3 billion.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.