Thursday 17 October 2019

Applegreen pumps resources into new US expansion deal

Into the west: Applegreen’s chief operating officer Joe Barrett at one of the company’s forecourt outlets. Photo: Damien Eagers / INM
Into the west: Applegreen’s chief operating officer Joe Barrett at one of the company’s forecourt outlets. Photo: Damien Eagers / INM
John Mulligan

John Mulligan

Applegreen is expanding its presence in the United States with the acquisition of the leaseholds on forecourt sites in Michigan, Minnesota and Wisconsin.

Applegreen already operates service stations in Florida, South Carolina, Massachusetts and Long Island, having first entered the US market in 2014.

The Irish company has secured 46 sites in its latest US deal, with a significant number of these sites concentrated in and close to the greater Minneapolis and St Paul metropolitan area. All of these sites are petrol filling stations which currently include convenience store operations. No up-front consideration is required to be paid by Applegreen.

It's secured the leaseholds from Lehigh Gas Wholesale, CrossAmerica Partners and their affiliates. Lehigh is a subsidiary of CrossAmerica.

Applegreen said that it's entering into an initial 10-year lease agreement for the outlets, "with favourable terms and extension options negotiated in order to allow for a low-risk expansion of Applegreen's presence in the USA".

Applegreen chief operating officer Joe Barrett confirmed to the Irish Independent earlier this year that the company was in talks with CrossAmerica on foot of a deal the American firm did late last year to acquire 192 mid-west forecourts from Circle-K owner Alimentation Couche-Tard in an asset swap. The first tranche of asset exchanges under that deal between CrossAmerica and Alimentation Couche-Tard was only finalised last month.

CrossAmerica indicated last year that it was already in talks with unnamed operators in relation to the 192 forecourts it will acquire from Couche-Tard.

Applegreen has done previous deals in the US with CrossAmerica.

In its previous deal, its inked an agreement with the American firm to lease 43 filling stations in Florida, expanding the Irish group's US presence.

The Irish firm has 121 outlets along the eastern seaboard in the United States.

"Following significant acquisitions on the east coast of the USA in the past two years, we are delighted to announce our first major acquisition in the mid-west," said Applegreen CEO Bob Etchingham yesterday.

"We consider this group of sites to be a good fit for our business given the convenience of its locations centred in the large metropolitan area of Minneapolis-St Paul and we are happy to expand on our existing relationship with CAP [CrossAmerica Partners] in the USA."

He added: "We believe that this acquisition represents an opportunity to establish a significant presence in another market in the USA while leveraging our existing management and operational capabilities."

Applegreen is also constructing a $3m (€2.6m) trunk road service area in Massachusetts - its first in the US.

Applegreen also acquired 24 motorway service areas, two trunk road service areas and 29 hotel premises in the UK when it bought just over a 55pc stake in UK motorway service operator Welcome Break last year in a €440m deal.

Applegreen has an option to lift its stake to 70pc within six years.

Last year, excluding the Welcome Break acquisition completed last October, Applegreen's adjusted earnings before interest, tax, depreciation and amortisation rose 20pc last year to €47.8m. Revenue was 32pc higher at €1.9bn.

Including Welcome Break, the figures were €58.1m and €2bn respectively.

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