GPM, Oak Street Buy TEG Retail Portfolio for $375M

Richmond-based gas station retail chain GPM Investments has agreed to acquire Transit Energy Group (TEG), a privately held convenience store and wholesale fuel company with 350 outlets in the Southeast, for $375M plus the value of inventory.

The deal, announced this week by GPM parent ARKO, includes fuel supply rights to approximately 200 commercial, government and industrial dealers. GPM also will acquire TEG’s bulk storage, distribution and transportation assets.

About $265M in funding for the acquisition will come from Oak Street Real Estate Capital as part of a $1.15B agreement, announced last year, between ARKO and Oak Street that will transfer ownership of the TEG assets to Oak Street in a sale-leaseback with GPM, according to a statement on ARKO’s website.

ARKO will cover $60M of the purchase price with a cash payment. Payment of the inventory purchase, valued at $50M, will be deferred and is payable in two annual payments of $25M, which ARKO may elect to pay in cash or shares of common stock on the first and second anniversaries of the closing.

The acquisition expands ARKO’s retail footprint into Alabama and Mississippi and grows the Fortune 500 company’s portfolio to more than 1,530 convenience stores and more than 1,800 wholesale dealer sites.

ARKO estimates that the privately held TEG portfolio will add about 285 million gallons of gasoline to the 2B gallons of fuel ARKO sells annually.

Energy investment firm ECP formed TEG in 2019. South Carolina-based TEG’s portfolio includes stores in Alabama, Arkansas, Louisiana, Mississippi, Missouri, North Carolina, South Carolina and Tennessee, operating under brands including Flash Market.

ARKO broke into the Fortune 500 this year, ranking no. 498 on the annual list. In July, the company acquired Fredericksburg, VA-based Quarles Petroleum, a fleet-fueling operator, for $170M.

Gas-station convenience stores have been hot commodities this year, as several national and regional chains battle for hegemony in the highly competitive market.

A duel between two regional chains has been ongoing in Pennsylvania, GlobeSt.com reported. In June, Wawa announced that it plans to open up 40 additional stores in Pennsylvania along the Susquehanna River during the next three to five years, which would double the number of stores Wawa has in the region.

According to a report in the Pittsburgh Post-Gazette, Altoona, PA-based Sheetz has plans to open as many as 30 new stores in Western PA and has chosen CBRE to assist RBG Development with picking the sites for the new outlets.

At the beginning of 2022, Sheetz said it is launching an Ohio expansion that envisions 50 new stores opening in the Columbus area in the next five years, with Skilkin Gold as the exclusive real estate developer for sheets in Central Ohio.

Wawa is in the middle of a build-out that will open 54 new stores in its current markets by the end of the year. Wawa also has announced plan to enter the Tennessee market in 2025, estimating that it could eventually open as many as 40 stores in the Nashville area, where the first TN franchise will be located.