GPM Investments to acquire 350 wholesale and retail sites from Transit Energy Group

Dive Brief:

GPM Investments, a subsidiary of c-store retailer and fuel wholesaler ARKO, has agreed to acquire 350 wholesale and retail sites — including 150 company-operated convenience stores — from Transit Energy Group (TEG) for $375 million, according to a Monday news release.
The deal would expand ARKO’s c-store footprint to more than 1,530 locations and extend its reach into Alabama and Mississippi — its 36th and 37th U.S. states of operation. Moving into new territories is something ARKO prioritizes when seeking acquisitions, Arie Kotler, president and CEO of ARKO, said in a recent interview.
With 22 acquisitions since 2013 now under its belt, ARKO plans to continue making strategic acquisitions at highly attractive multiples, Kotler said in the announcement.

Dive Insight:

ARKO’s latest move continues the company’s focus on mergers and acquisitions, which is a core pillar of its business, Kotler said in a recent interview. The move comes on the heels of a strong second quarter for ARKO, during which its net income grew by nearly 25%.

“A deal of this magnitude complements our core capabilities and will create long-term value for ARKO stockholders and valuable synergies given our existing footprint and proven strategy of adding value to strong local brands while keeping jobs in place,” said Kotler in a press release.

The newly acquired TEG c-stores — which operate under the Flash Market, Corner Mart and Minit Mart banners — will implement GPM’s Fas Rewards loyalty program. Kotler said in the interview that when ARKO acquires another brand, it tries not to change much about the brand, though it will "change some of the experience" for the customers at the store, including implementing ARKO's marketing and rewards program.

Beyond TEG’s 150 c-stores, the deal also includes fuel supply rights to approximately 200 dealer sites, bringing ARKO’s wholesale segment to over 1,800 locations. It also includes TEG’s commercial, government and industrial customers, as well as TEG’s bulk storage, distribution and transportation assets, all in the Southeast. The acquisition is expected to add about 285 million fuel gallons, the majority branded, to the two billion gallons ARKO already sells annually.

TEG was founded by investment firm Energy Capital Partners in 2019 to own, operate and acquire downstream fuel distribution and retail assets.. Besides Alabama and Mississippi, TEG operates c-stores in Arkansas, Louisiana, Missouri, North Carolina, South Carolina and Tennessee.