Convenience Store News

MAR 2017

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14 Convenience Store News | MARCH 2017 | WWW.CSNEWS.COM INDUSTRY ROUNDUP T he pending multi-billion dollar merger between Tesoro Corp. and Western Refining Inc. could face a delay fol - lowing a request for more information by the Federal Trade Commission (FTC). The inquiry could extend the merger review for up to 30 days starting from the time both companies file their answers. "We and Western have been cooperat- ing with the FTC staff since shortly after the announcement of the merger agreement and are continuing to cooperate with the FTC staff in its review of the transactions contemplated by the merger agreement," Blane Peery, vice president and controller for Tesoro, wrote in a filing with the U.S. Securities and Exchange Commission. "We continue to expect the acquisition to be completed in the first half of 2017." The companies are also facing two class- action lawsuits — one brought against Tesoro by a group of its shareholders and another by Western Refining stockholders. During Tesoro's earnings call on Feb. 7 Gregory Goff, chairman, president and CEO of Tesoro, said the company is committed to delivering $350 million to $425 million in annual synergies from operational improve- ments, value-chain optimization and corpo- rate initiatives, with a run rate to achieve by the end of the second year. "The acquisition is expected to create a premier and highly integrated geographi- cally diversified refining, marketing and logistics company, and provide a strong platform for earnings growth and cash flow generation," Goff said. Both sides have begun working together to create a combined 3,000-plus station operation, he added. "We are confident in our ability to achieve these targets given our solid track record of integrating operations and deliv- ering results," the CEO said. "Integration planning is well underway and a planning team with representatives from both compa- nies was established in December to ensure an effective and efficient transition." The presence of children in the household seems to have the greatest influence over whether conve- nience store shop- pers choose to visit a small operator or a chain. Shoppers sans kids at home show a striking prefer- ence for small opera- tors: 67.7 percent vs. 56.9 percent. Source: Convenience Store News 2017 Realities of the Aisle Study (page 24) "…Where you are going to see more acquisitions is in the small to mid-sized companies. There is going to be increasing pressure on the guys who have 25 to 75 stores. It's going to be more difficult for them to compete with these very large players." — Dennis Ruben, NRC Realty & Capital Advisors LLC (page 28) FAST FACT QUOTABLES Tesoro & Western Refining Move Toward Integration Federal Trade Commission request for more information could push back merger

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