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Friday, January 25, 2013

Guest Perspective: C-Store Industry Year in Review (Part 1 of 2)

An M&A and capital markets perspective
Source: CSP Daily News
By Dennis L. Ruben

SCOTTSDALE, Ariz. -- This article is designed to be the first in a series of annual and quarterly convenience store industry reviews from a mergers and acquisition and capital markets perspective. Our objective in this article is to provide an overview of all of the relevant, meaningful transactions that occurred in the industry during 2012.

Introduction

After reviewing all available information about transactions and capital-related developments in our industry during 2012, some very clear conclusions emerge. Most important, it was a significant year for acquisitions of all sizes and types.

Although 7-Eleven Inc. was the "800-pound gorilla" in terms of the number and size of acquisitions it completed, there were many other buyers and sellers at all levels of the spectrum--from the small 10-store operator to the very large operator with more than 200 stores.

Dennis L. RubenFurthermore, there was even a major oil company acquisition--Sunoco Inc. was acquired by Energy Transfer Partners LP (ETP). But the common theme is the same. More and more operators, particularly those who are smaller or midsize, concluded that they either needed to grow to be competitive in the marketplace or they needed to sell. And with 7-Eleven, Circle K and new master limited partnerships (MLPs) with large amounts of capital to invest, as well as climbing prices for convenience store assets and companies, the decision of many operators to sell became more logical.

A number of established companies, such as Susser Holdings, Wawa, Casey's General Stores and Kum & Go, embarked on aggressive new-store development initiatives during 2012, and many other industry participants elected to grow by acquisition of portfolios of retail assets having an established track record of performance. More important, the addition of MLPs on the scene only added more competitors to an already crowded field of potential purchasers.

As we have noted previously, within the past two years every major player in the industry has become much more aggressive in looking for acquisition opportunities. Companies that historically were only interested in certain markets or groups of stores of a certain size have expanded their horizons.

Now, it seems as if everyone is looking at every deal--no matter where it is or how big or small it is. Companies are not only looking for acquisitions for growth, but they are also looking over their sh