Dive Brief:

• Arko Corp. called TravelCenters of America’s rejection of its bid to acquire the travel center chain “a direct assault” on its commitment to get a deal done, noting that while Arko is still willing to make a deal, a path towards one now seems “extremely difficult,” according to a Tuesday letter from Arko.
• TravelCenters of America (TA) announced that it met with Arko Corp. on April 19 after getting the okay from BP, according to a filing with the Securities and Exchange Commission Monday. After those discussions, it still felt Arko’s latest offer, which was submitted on April 17, did not surpass BP’s agreement for $86 per share. 
• In addition to previous issues around financing, TA on Monday also noted that Service Properties Trust, a real estate investment trust which leases the land under 178 of TA’s 281 travel centers, said it would not accept Arko as its guarantor.

Dive Insight:

Arko has repeatedly tried to nab TA away from BP, initially making its counteroffer on March 14 for $92 per share and updating its offer several times. But the travel center chain’s board has remained steadfast that Arko’s offer is insufficient, even after conducting a recent phone meeting. 

This latest turn in the saga began when Arko submitted a new letter to TA on April 17. The board reviewed the proposal and still felt it insufficient, but sought permission from BP to speak with Arko. 

After getting that permission, representatives from the two companies met by phone on April 19, after which TA reiterated that it didn’t think Arko’s offer was superior to BP’s. Again it noted what it perceived as deficiencies in Arko’s plan for financing the acquisition.

In a separate presentation TA posted on Monday, it also noted that "TA's prior experience with ARKO suggests it is not a reliable counterparty.” This is also where it noted that Service Properties Trust would not work with Arko.

Arko, meanwhile, decried the half-hour meeting the two held, noting that TA’s advisors “requested yes or no answers to questions clearly designed to not be fully answerable on such basis,” and expressed uncertainty as to wether the meeting was “designed to elicit useful information for the Board or provide cover for its advisors.”

As for the financing question, Arko said, “We have discussed the transaction in detail with Oak Street Capital among other financing sources, and based on those discussions we have been confident for weeks that if given access to due diligence or had you included us in your sale process to begin with, we would have been able to sign and close in short order without any financing contingency risk to TravelCenters whatsoever.”

Arko closed the letter inviting TA to contact it again if the situation changed.

Separately, TIG Advisors, an investment advisor that owns almost 5% of TA stock, sent a letter on Friday asking the travel center chain to allow Arko to submit an official proposal — marking the first time a shareholder had injected itself in what has become a protracted back-and-forth discussion. TIG asserted in its letter that TA may be putting the needs of Service Properties Trust and asset management company RMR Group, which acquires properties for the REIT, over the needs of the rest of its shareholders.

Those two companies own almost 12% of TA’s outstanding shares, and have both already pledged to vote in favor of the BP acquisition. 

Under the BP agreement, Service Properties Trust would gain over $379 million in cash when the acquisition closed and would amend the leases for those locations for a combined $20.5 million per year under BP’s ownership. 

It is not clear if TA’s meeting with Arko addresses the investment advisor’s concerns.

A vote on BP’s acquisition is scheduled for May 10. If it passes, the acquisition will officially close on May 15.

Mergers and acquisitions in the convenience retail space remain the center of attention, with news of western convenience store chain Maverik’s expected buyout of Des Moines-based Kum & Go coming on Friday alongside the latest updates on TA and BP’s proposal.