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Sunday, April 12, 2015

Insider's View: Q1 2015 M&A Review
Big names making big deals as momentum picks up steam

Source: CSP Daily News
By Dennis L. Ruben, Executive Managing Director, NRC Realty & Capital Advisors LLC

SCOTTSDALE, Ariz. – The first quarter of 2015 picked up where things left off in 2014 in terms of merger and acquisition activity in the convenience-store industry. Following on the heels of some very large transactions that either closed or were announced during the fourth quarter of 2014, the momentum seems to be continuing, and, if anything, picking up steam.

The acquisition of The Pantry Inc. by Alimentation Couche-Tard/Circle K closed during the first quarter, and a number of significant transactions were announced during the quarter, as well. Furthermore, the appetite for acquisitions from the master limited partnerships (MLPs) and the major industry players seems to be growing by the quarter.

Many of the major industry participants are looking at a number of deals, and others, such as Wawa, are expanding through explosive organic growth. If the first-quarter activity is any indication of what is to follow in next nine months, 2015 should prove to be a very active year.

Alimentation Couche-Tard/Circle K

The first quarter of 2015 was certainly a busy one for Alimentation Couche-Tard/Circle K.

On March 16, Couche-Tard completed its merger with The Pantry Inc. The all-cash transaction, in the amount of $860 million, represented a per-share price of $36.75, with a total enterprise value of approximately $1.7 billion including debt. The transaction purchase price represented a 27% premium to The Pantry’s closing share price on Dec. 16, 2014. Post-merger, the combined U.S. and Canadian store count is more than 7,800.

Couche-Tard also announced that it acquired 21 Tiger Tote Food Stores, as well as 151 dealer fuel supply agreements in Texas, Mississippi and Louisiana from Cinco J Inc., dba Johnson Oil Co. of Gonzales, Texas. It is anticipated that all of the acquired stores will be converted to the Circle K brand.

CST Brands Inc./CrossAmerica Partners LP

CrossAmerica Partners LP closed on the purchase of all of the outstanding shares of Hudson, Wis.-based Erickson Oil Products Inc. and certain related assets for $85 million, subject to certain post-closing adjustments. Erickson operates 64 convenience stores in Minnesota, Michigan, Wisconsin and South Dakota, with a concentration in the Twin Cities. CrossAmerica intends to operate the Freedom Valu convenience stores, but expects to transfer the operation of certain sites over time to CST Brands Inc., the parent company of CrossAmerica’s general partner.

In late March, Joe Topper, chief