For the second time in as many years, a change is coming in the ownership of a group of convenience stores located in the twin cities.
Sunoco LP, the parent company of Stripes c-stores, has announced the sale of a majority of its stores to 7-Eleven, Inc.
The deal involves more than 1,100 stores, includes six Stripes locations in Bryan and College Station. Sunoco acquired four of the six last year from Brenham based Rattlers.
The transaction, which is expected to be completed by the end of 2017, includes 7-Eleven paying $3.3 billion dollars in cash and entering a 15 year agreement to purchase 2.2 billion gallons of Sunoco fuel each year.
Sunoco LP (NYSE: SUN) (“SUN”) today announced that it entered into a definitive asset purchase agreement for the sale of a majority of its convenience stores to 7-Eleven, Inc. (“7-Eleven”).
Total consideration in the transaction is $3.3 billion in cash plus fuel, merchandise and other inventories. SUN expects to use the proceeds to repay indebtedness and for general partnership purposes.
SUN President and Chief Executive Officer Bob Owens stated, “The sale of these retail assets to 7-Eleven is the beginning of an exciting evolution for SUN into a premier nationwide fuel supplier. Our supply agreement with 7-Eleven provides SUN with a predictable long-term income stream, and this transaction quickly allows SUN to improve its financial profile.”
Assets being sold to 7-Eleven include approximately 1,110 convenience stores in 19 geographic regions primarily along the East Coast and in Texas, and the associated trademarks and intellectual property of the Laredo Taco Company and Stripes. As part of the transaction, SUN will enter into a 15-year take-or-pay fuel supply agreement with a 7-Eleven subsidiary under which SUN will supply approximately 2.2 billion gallons of fuel annually. This supply agreement will have guaranteed annual payments to SUN, provides that 7-Eleven will continue to use the Sunoco brand at currently branded Sunoco stores and includes committed growth in future periods.
Approximately 200 convenience stores in North and West Texas, New Mexico and Oklahoma will be sold in a separate process. SUN’s Aloha Petroleum business unit in Hawaii will continue to operate its highly efficient and integrated business model within SUN. Likewise, the transaction does not include SUN’s highly successful APlus franchisee-operated stores.
SUN’s transaction with 7-Eleven is the first step in SUN’s strategic shift away from company-operated convenience stores to focus on its industry-leading fuel supply business. Led by the iconic Sunoco fuel brand and successful APlus franchise, SUN plans to be a leading consolidator in the domestic wholesale fuels business, supplying fuel to a network of more than 8,900 locations of third-party dealers, distributors and other commercial customers, with an enhanced focus on MLP qualifying income. Additionally, the proceeds received in this transaction will be used to further enhance SUN’s credit profile and leverage profile.
This transaction is subject to regulatory clearances and customary closing conditions and is expected to close by the fourth quarter 2017.
From the 7-11 corporate website:
7‑Eleven, Inc., the premier name and largest chain in the convenience-retailing industry, is pleased to announce it has entered into an asset purchase agreement with Sunoco LP. As part of the agreement, 7‑Eleven will acquire approximately 1,108 convenience stores located in 18 states.
“This acquisition supports our growth strategy in key geographic areas including Florida, mid-Atlantic states, Northeast states, and Central Texas,” said Joe DePinto, President and Chief Executive Officer of 7‑Eleven Inc. “It also provides 7‑Eleven entry into Houston, the 4th largest city in the United States, and a strong presence in Corpus Christi and across South Texas.
7‑Eleven, Inc. has 8,707 stores in the United States and Canada. This acquisition will be one of the largest in 7‑Eleven, Inc.’s history, and it will bring 7‑Eleven, Inc.’s total number of stores to 9,815 in the U.S. and Canada.
The transaction is expected to close in the second half of this year.