Convenience Store News - July 2018 - 48
Picking Up the Pace
By a rough count, 2018 merger and acquisition (M&A) activity in the convenience
channel as of press time has included at
least nine notable deals, either completed
or pending. The most significant is the
pending merger of Andeavor and Speedway LLC parent Marathon Petroleum
Corp. that will create a nationwide retail
and marketing business of approximately
4,000 company-owned and -operated
locations and approximately 7,800
This seems to be the new normal in the
"All the M&A activity doesn't surprise me
anymore. It's been going on for five or
six years now and if there is any surprise,
it's that it has not slowed down at all,"
He does admit, though, to being surprised
by some smaller deals being done by
big chains. "It's like all the big guys have
been gobbled up," he said. "When you are
seeing chains of 20 to 30 stores being purchased by some of the bigger guys, that's
a little bit of a surprise."
M&A mania in the convenience and gas
(C&G) sector remains very strong, according to John Sartory, managing director
of Petroleum Capital & Real Estate LLC, a
provider of transactional advisory services.
"The market forces, such as generational succession issues for many existing operators,
the long-term capital investment requirements to remain competitive in the retail
industry, the need for the publicly traded
C&G companies to continue to grow market
Enmarket, Savannah, Ga.
Pester Marketing Co., Denver
Andeavor, San Antonio
Yesway, Beverly, Mass.
Croton Holding Co., Pittsburgh
Sampson Bladen Oil Co. Inc., Clinton, N.C.
Clarks Pump N Shop Inc., Ashland, Ky.
Source: Nielsen TDLinx, Convenience Store News Market Research
48 Convenience Store News C S N E W S . c o m
share and cash flow, etc. - to only name a few - that have
driven this consolidation have not subsided," he noted.
However, Sartory believes it's a little too early to state that
2018 is going to be a record year in the number of acquisitions completed in the convenience and gas industry.
Steve Griffin, managing partner of Downstream Energy
Partners LLC, says in his opinion, 2018 appears to be robust
compared to other years. And his company expects to see
"Some of the activity may be holdover from 2017, given
that was an election year where M&A activity tends to be
stagnant. However, multiple consecutive years of strong
financial performance have given marketers an opportunity
to consider finally selling their equity," he said. "Many of
our clients wish there were more acquisition opportunities
Cheap money and continuing industry consolidation are
key factors behind the pace of activity, according to Terry
Monroe, president of American Business Brokers & Advisors.
"If I can get cheap money, then I can buy more stores
and therefore increase my buying power, which relates to
lowering my costs to operate," he explained. "That enables
me to have more profit, so the cycle continues until the
cheap money goes away. But, by then, I will have a bunch
of stores and a lot of locations tied up around the country."
The days of cheap money may be coming to an end soon,
however, as mortgage rates rise - and the Federal Reserve
appears to favor that trend, noted Steve Montgomery,
president of b2b Solutions.
"If a significant rate increase should occur, we will see a
slowdown in M&A activity as buyers factor higher discount
rates into their valuations," Griffin echoed. "Wall Street buyers
generally, and MLPs as a subset, are hyper-rate sensitive."
In addition, sellers who previously may have