US convenience store chain The Pantry has signed an agreement to acquire 40 convenience stores.
The company is acquiring the outlets from Herndon Oil Corp., and is expected to be funded with “cash on hand”, The Pantry said today (14 April).
Of the 40 stores, thirty-two are located in Mobile, Alabama and the surrounding Interstate-ten corridor; six are in Florida and two are in Mississippi and Louisiana.
The stores operate under a variety of names, including the Flamingo banner, and generated revenues of around US$189m during the 12 months ended June 2008.
“This acquisition fills a gap in our existing store base and represents our initial entry into the attractive Mobile market,” said Peter Sodini, president and CEO. “We expect this transaction to be accretive to our earnings per share in the first 12 months after closing.”
The acquisition, which is subject to regulatory approvals, is expected to close in the second half of the year.
Meanwhile, The Pantry also announced that, during its second fiscal quarter, it repurchased $26m in principal amount of outstanding bonds.
As a result, the company will include a pre-tax gain of over $6m on the extinguishment of debt in its financial results for the quarter, which will be reported in early May.
Sodini added: “We believe the repurchase of outstanding bonds at a discount and the pending acquisition both represent high-return investments on behalf of our shareholders and are key steps forward in executing our balanced strategy of reducing debt while growing the business.”
