Mergers & Acquisitions

TravelCenters of America Rejected Buyout Bid

But could a deal still happen?

UPDATE (June 16, 2016): TravelCenters of America LLC has confirmed that it received a non-binding letter from a private-equity firm in December 2015 asking to have confidential discussions about that firm possibly buying TA. “TA confirmed that the TA board of directors responded to that firm that the interests of TA were best served by pursuing TA’s existing business plans. In its response, the TA board agreed with the private-equity firm that TA’s assets, business model and competitive position have tremendous potential. The TA board further articulated its belief that TA has the management team and other resources appropriate to realize such potential. The TA board did not agree that the bulk of TA’s potential should be transferred to the private-equity firm through a buyout.”

WESTLAKE, Ohio --TravelCenters of America LLC rejected a $14-per-share bid in December from Golden Gate Capital, according to a Wall Street Journal report, but the private-equity firm remains interested in a deal, people familiar with the matter told the newspaper.

Golden Gate hasn’t been in contact with the company since the offer was rejected, and the San Francisco firm isn’t interested in making a hostile bid, some of the people said.

The deal would have valued TravelCenters of America at about $540 million.

But low gas prices have weighed on the company this year, said the report, dragging its stock down 26% to $6.94. TravelCenters’ market value currently stands at about $270 million, the Journal said.

Westlake, Ohio-based TravelCenters of America operates 255 TA and Petro Stopping Centers locations, mostly along the interstate highway system. The company also owns 228 convenience stores under the brand name Minit Mart. It has been growing that c-store business in recent years with a series of acquisitions of various sizes.

Golden Gate has invested in a number of consumer-facing businesses over the years, including casual-dining chain California Pizza Kitchen. In 2014, it bought the Red Lobster restaurant chain from Darden Restaurants Inc., financing the deal with a $1.5 billion sale-leaseback transaction.

In late 2015, TravelCenters of America bought the Quaker Steak & Lube automotive-themed casual dining restaurants.

TravelCenters has missed Wall Street’s earnings forecasts in each of the past four quarters, according to the report, citing Thomson Reuters. In the first quarter, it lost 26 cents a share, compared to profit of 41 cents a share a year earlier, as revenue fell 17%. Fuel revenue declined nearly 30% in the quarter, even as the volume rose 8%.

TravelCenters has faced pressure from an activist investor to separate its businesses and launch a stock buyback program. In February 2015, RDG Capital Fund Management LP recommended that the chain sell its real estate and create a separate company for its truck-repair business, saying both were worth more on their own than the entire company’s market value.

TravelCenters last year reached a deal to sell the land under 30 of its locations to a real-estate investment trust for $397 million and lease it back.

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