Convenience Store News

FEB 2017

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10 Convenience Store News | FEBRUARY 2017 | WWW.CSNEWS.COM INDUSTRY ROUNDUP D elek US Holdings Inc. and Alon USA Energy Inc. have reached a deal for Delek US to acquire all of the outstanding shares of Alon common stock it does not already own. The all- stock transaction carries an equity value of $464 million. According to the two companies, the enterprise value of the deal for Delek to take ownership of the remaining 53 percent of Alon shares of common stock is approximately $657 million. That includes the proportionate assumption of $152 million of net debt related to the transaction, and $59 million of market value for the non-controlling interest in Alon USA Partners LP. This deal gives Delek a new foothold in the convenience channel. It previously owned the MAPCO chain of convenience stores. The Brentwood, Tenn.-based com- pany sold that retail network last year to Compañía de Petróleos de Chile COPEC S.A. (COPEC). Dallas-based Alon is North America's largest 7-Eleven licensee, with 307 con- venience stores. In July, Alon formed a special committee to review a number of strategic alternatives, including a potential business combination with Delek; the anal- ysis of capital investments; shareholder dis- tributions; or a sale or merger and spinoff or separation of a selected business. Delek's purchase of Alon, which is expected to deliver between $85 million and $105 million in synergies in 2018, will give Delek "an integrated retail system in the Permian Basin we can continue to invest in," said Uzi Yemin, chairman, president and CEO of Delek US. As Delek Executive Vice President Fred Green further explained, this transaction will create a larger geographic footprint on a combined basis. "The retail sys- tem of approxi- mately 307 stores in the Southwest is supported by the Big Spring refinery and offers a platform for future growth," Green said during a com- pany conference call held Jan. 3. Delek will apply "its previous experience in improving and growing a retail platform to create value from this system," according to Green. Alon's retail portfolio differs from Delek's previous experience with MAPCO because it is more integrated, said Yemin. Plus, the portfolio's location — namely, the Permian Basin — offers the potential Delek needs "to evaluate in a different light." MAPCO and Alon c-stores also differ in format, the chief executive noted. Alon did not build "what we call mega- stores, so we would like to explore the opportunity to build some megastores in the area before we start jumping in to sell the stores," said Yemin. The transaction is expected to close in the first half of this year. Frequent convenience store shoppers (those who visit daily or weekly) are most often found in the 45- to 54-year-old age range; the $75,000-$99,999 income range; and in the Northeast region of the United States. They are also most likely to be men. Source: Convenience Store News 2017 Realities of the Aisle Study (page 43) "People need to label everything so that it fits in a box, but the truth is, we don't fit in a box. When we opened Mini Mini, nobody knew what to do with it." — Mini Mini co-owner Matt Brown (page 19) FAST FACT QUOTABLES Delek to Gain Integrated Retail Network With Alon USA Deal Former MAPCO parent will explore new megastores in the Permian Basin region

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