Mergers & Acquisitions

TravelCenters of America Confirms Rejection of Arko’s Acquisition Bid

Board says it is not superior to bp’s offer, ‘nor is it likely to lead to a superior proposal’
travelcenters of america
Photograph courtesy of TravelCenters of America

TravelCenters of America Inc. has confirmed that its board of directors has rejected Arko Corp.’s unsolicited bid to acquire the company. It said that the board “previously reviewed and determined that the conditional, unsolicited and unfinanced proposal from Arko Corp. to acquire TA is neither superior to the transaction TA previously agreed to with bp Products North America Inc., nor is it likely to lead to a superior proposal.”

On March 14, 2023, Arko submitted an unsolicited, non-binding indication of interest to acquire TA. Following a comprehensive review with its financial and legal advisors, the TA board unanimously concluded that Arko’s proposal did not constitute a superior proposal and could not reasonably be expected to lead to a superior proposal, the company said. It cited what it called the “high level of execution risk resulting from Arko’s failure to obtain committed financing and that Arko’s sub-investment grade credit rating was not attractive to Service Properties Trust, the landlord of most of TA’s properties.”

In a news release and letter to TA, both distributed on March 27, Arko restated the terms of its March 14 proposal and asked TA’s board to reconsider its proposal.

Arko’s offer followed bp’s Feb. 16, 2023, entry into a merger agreement with TA, pursuant to which bp would acquire all of the outstanding shares of TA common stock for $86 per share in cash, which represents an 84% premium to the average trading price of the prior 30 trading days before the announcement. The TA board unanimously approved the bp transaction.

The bp transaction is the result of an extensive process during which TA and its advisors engaged with multiple potential buyers who the TA board believed could close with cash on hand or otherwise had committed financing, said TA. In order to meet SVC’s minimum credit criteria for the new tenant and guarantor of the leases between TA and SVC, only parties that had a minimum investment-grade credit rating of BBB/Baa were invited into the process, it said. bp is financing the transaction with cash on hand and has an investment grade credit rating of A3/A-. “Arko requires third-party capital to close any potential acquisition, and its sub-investment credit rating of B+/B2 is several notches below BBB/Baa,” TA said.

A condition to consummation of the bp transaction is approval by shareholders who own a majority of TA’s shares outstanding. SVC, which owns 7.8% of TA’s shares outstanding, and The RMR Group, which owns 4.1% of TA’s shares outstanding, both have agreed to vote their shares in favor of the transaction, TA said. TA has set a record date of March 23, 2023, and has filed its preliminary proxy statement for shareholder approval of the bp transaction. Subject to shareholder and regulatory approval, the parties are targeting closing the acquisition by mid-year 2023, said TA.

  • 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.

London-based integrated oil company bp, with U.S. headquarters in Chicago, owns convenience-store brands ampm, based in La Palma, California, and Thorntons, based in Louisville, Kentucky, which it acquired in August 2021.

Richmond, Virginia-based Arko Corp., which owns 100% of GPM Investments, is one of the largest operators of convenience stores and wholesalers of fuel in the United States. Arko operates in four reportable segments: retail, wholesale, fleet fueling and GPM Petroleum, which sells and supplies fuel to its retail and wholesale sites. GPM Investments owns and operates c-store brands including Fas Mart, Shore Stop, Scotchman, BreadBox, Young's, Li'l CricketNext Door Store, Village PantryApple MarketJiffi StopAdmiralRoadrunner MarketsJiffy Food MartsE-Z Mart1 Stop, TownStarr, ExpressStop and Handy Mart.

TA, a publicly traded, full-service travel center network, has 280 locations in 44 states and Canada, principally under the TA, Petro Stopping Centers and TA Express brands. Offerings include diesel and gasoline fuel, truck maintenance and repair, full-service and quick-service restaurants, travel stores, car and truck parking and other services. The Westlake, Ohio-based company operates more than 600 full-service and quick-service restaurants and nine proprietary brands, including Iron Skillet and Country Pride.

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