Monday 22 January 2018

Applegreen boosts its US presence with acquisition

Bob Etchingham, ceo of Applegreen
Bob Etchingham, ceo of Applegreen
John Mulligan

John Mulligan

the stock market-listed Irish forecourt retailer Applegreen will continue to eye expansion opportunities in the eastern United States after buying a chain of filling stations in South Carolina as part of a $75m (€66m) deal, according to CEO Bob Etchingham.

The company has agreed to buy a chain of 34 filling stations around South Carolina's state capital, Columbia.

Eleven of the stations include Burger King outlets, while they also have other food offerings, such as Subway.

The deal also includes the acquisition of eight stand-alone Burger King sites. Applegreen already has 17 Burger Kings at its forecourts in Ireland.

Founded by Robert Brandi, the chain operates 'Pitt Stop' stores at filling stations it operates under a number of franchises with oil firms including Exxon, Mobil, Shell and Sunoco.

The business is being acquired by Applegreen under a sale and leaseback structure.

The Irish company is paying $5.4m (€4.7m) for the trade and certain assets of Brandi Group, while a US institutional investor will buy property assets of the business for $70.1m (€61.5m).

Once the transaction completes towards the end of this year, Applegreen will enter into a long-term lease arrange with that property investor for the sites.

The business being acquired is generating annual adjusted earnings before interest, tax, depreciation and amortisation of about $3m.

Applegreen already operates a total of 13 filling stations in Long Island and Massachusetts.

Mr Etchingham told the Irish Independent that Applegreen will probably bed down the latest acquisition over a one- to two-year period before contemplating another US acquisition.

"We are opportunistic," he said. "We regard the east coast as being where we would like to develop in the US.

"We wouldn't be averse to filling out between New England and South Carolina if the right opportunity came along."

The CEO said the way the Brandi deal is structured meant that it de-risked the acquisition for Applegreen.

"We were conscious of the fact that we're relatively new to the US and we don't have any in-depth knowledge of the South Carolina market, so this is a way of de-risking it to some extent," he said. "It's a capital-light approach that we've taken.

"While the ebitda is less than it could potentially be, we feel it's the right thing to do."

He added that one of the attractions of the deal was that Brandi Group is so heavily invested in food retailing.

Irish Independent

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