Susser, Town & Country Sign $361M Agreement

Susser will finance the transaction through a combination of debt and lease financing and excess cash. As part of the transaction, Susser will acquire 168 convenience stores, 161 of which operate under the Town & Country brand name, and seven under the Village Market brand. Also on the docket are Town & Country's Country Cookin' restaurants which operate in 110 of the stores, as well as a 14-property land bank.

Susser operates 330 convenience stores under the Stripes brand name and supplies branded motor fuel to independent dealers through its wholesale fuel decision. The company also owns and operates 150 Laredo Taco Co. restaurants inside the Stripes stores. Susser stores are predominantly in the southeast area and Rio Grande Valley of Texas and in Oklahoma. Town & Country stores can be found in West Texas and the Panhandle, and Eastern Oklahoma, and has little overlap with Susser's outlets.

Sam L. Susser, Susser Holdings president and CEO said his company's management had been talking with that of Town & Country's for eight years before an agreement was hammered out. Susser said in a telephone conference call about the merger that the merger will double his company's size, and the plan is to open new stores and continue to develop existing sites in Town & Country's markets.

In addition to operating in markets of robust growth, "many of the Town & Countrys are in rural areas where the larger supermarkets don't operate," said E. V. Bonner Jr., Susser's EVP and general counsel. "This greatly enhances our own growth potential." It also means competition is low and barriers to entry high, as the population of many of the towns simply doesn't support the big-box developments, Susser added.

Susser said the Town & Country stores would be repositioned under Susser's Stripes brand, but the process would take place slowly, a market at a time. "When we made the conversion from Circle K to Stripes, we invested heavily in marketing and advertising to support the change," he added. "The stores overall benefited from refreshening of the exteriors, and now the opportunity here exists to help the exteriors of the Town & Country stores." He estimated the total cost of rebranding at $11 million, excluding specific advertising and marketing costs, and said that the process would begin during fall 2008.