Convenience Store operator The Pantry has successfully inked a deal to acquire 66 Petro Express convenience stores in North and South Corolina, extending the company’s lead in the convenience market in the southeastern US.
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The stores acquired generated revenues of approximately US$629m during the 12-months to October 2006, The Pantry said.
The deal also sees The Pantry take ownership of the wholesale fuel business of Carolina Petroleum Distributors of Charlotte, which sells in excess of 100m gallons of fuel annually.
Chairman and CEO Peter J. Sodini said: “The addition of Petro Express, which has built a leading market position in the Charlotte area, complements our existing store base and is expected to be immediately accretive to our earnings per share. While we already operate 327 stores in North Carolina, we have not focused on Charlotte and our presence there to date has been nominal, partly because of Petro Express’s strength. This acquisition provides us with an excellent platform for future growth in one of the Southeast’s most fundamentally attractive metropolitan areas.”
In an 8-K form filed with the Securities and Exchange Commission, The Pantry revealed that the purchase price, including a five-year non-compete clause, is expected to total $275m plus inventory at cost. Additionally, The Pantry will assume certain liabilities – principally up to $1m in contingent liabilities to gas suppliers. The Pantry said it plans to fund the acquisition through a combination of available finds and lease financing.
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By GlobalDataThe deal, which is subject to regulatory approval, is expected to close in the company’s third quarter.
The Pantry also reiterated yesterday (9 January) that it expects its first quarter earnings to be significantly down on last year’s results. Sodini said that the anticipated decline was due to lower average gasoline margins per gallon. The company’s Q1 ended 28 December 2006.
Despite the projected drop in profit, the company’s shares finished up yesterday, rising from an opening price of $47.71 to close at $49.13.
