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Thursday, September 2, 2010

The Pantry Enters New Markets With Acquisition

Source: Convenience Store News

CARY, N.C. -- The Pantry Inc. will expand its portfolio of convenience stores into two new states through the signing of a definitive agreement to acquire 47 stores located in Kansas and Missouri from Presto Convenience Stores LLC.

"This acquisition expands our geographic footprint and creates new fill-in opportunities for future growth," The Pantry President and Chief Executive Officer Terrance M. Marks said in a statement. The deal marks The Pantry's first venture into both of these states. Marks and his executive team recently gave Convenience Store News an inside view of the company's growth plans, which will be published in the Sept. 6, 2010 issue of CSNews.

The acquisition will include the real estate underlying 36 of the 47 locations. Of the stores, 44 are located in Kansas with three stores are located in Missouri. The stores operate under the Presto trade name and generated revenues of approximately $194 million during the 12 months ended May 2010, according to The Pantry.

Presto President Terry Presta added: "I've been privileged to watch the company that is now Presto grow from a single service station in Scott City, Kan., to just under 50 convenience stores in Kansas and Missouri. This move by The Pantry is a strong vote of confidence in our sites and in the communities we serve. Because of The Pantry's vast resources and strong management, this sale will be very positive for our employees and customers."

Presta, who has more than 30 years of experience in the convenience store industry and is a past president of ConocoPhillips national marketer advisory board, will be retained by The Pantry for a three-year period to assist in the transition, according to NRC Realty & Capital Advisors LLC, which served as the exclusive financial advisor to Presto.

The sale transaction also includes Presto's wholesale fuels business and ethanol blending operations, according to NRC. The majority of stores are concentrated in the Wichita market, with an additional four stores each in the Kansas City and Lawrence markets, and the balance throughout western Kansas, the company stated. Roughly two-thirds of the stores sell fuel under the Conoco or Phillips 66 brands, with the remaining stores selling Presto private-branded fuel.

The Pantry expects to fund the deal with cash on hand, and said the transaction should be accretive to earnings per share in the first 12 months after closing. The acquisition, which is subject to approvals and cust