Convenience store giant 7-Eleven has entered into an agreement with Enon, Ohio-based Marathon Petroleum Corp. to acquire the Speedway convenience store chain for $21 billion in cash. 7-Eleven will acquire approximately 3,900 Speedway stores and gas stations located in 35 states.
7-Eleven currently operates more than 9,800 stores in the United States. The addition of the Speedway locations will bring that total to 14,000 units.
"This acquisition is the largest in our company's history and will allow us to continue to grow and diversify our presence in the U.S., particularly in the Midwest and East Coast," said Joe DePinto, president and CEO of Dallas-based 7-Eleven. "By adding these quality locations to our portfolio, 7-Eleven will have the opportunity to bring convenience to more customers than ever before."
The deal will accelerate 7-Eleven's growth trajectory and diversify its presence in the U.S. According to 7-Eleven, the two convenience chains have complementary geographic footprints with little overlap. Following the transaction, 7-Eleven will have a presence in 47 of the top 50 most populated metro areas in the U.S., positioning the company as a clear industry leader in a fragmented industry with favorable macroeconomic trends.
The transaction is subject to customary regulatory approvals and closing conditions and is expected to be completed in the first quarter of 2021.
Nomura Securities International Inc. and Credit Suisse are acting as 7-Eleven's financial advisors. Both Nomura and Credit Suisse provided 7-Eleven's Board of Directors with a fairness opinion.
Affiliates of Credit Suisse and Sumitomo Mitsui Banking Corporation (SMBC) provided committed financing for the acquisition. SMBC and SMBC Nikko also provided financial advisory services to 7-Eleven parent company, Tokyo-based Seven & i Holdings Co. Ltd., in regards to the financing consideration.
Speedway, with annual pre-synergy run-rate EBITDA of approximately $1.5 billion prior to the acquisition, has significant opportunities for future growth. 7-Eleven said it expects to achieve $475 million to $575 million of run-rate synergies through the third year following closing, while maintaining financial flexibility and a strong balance sheet. Upon closing, 7–Eleven will be even better positioned to continue to pursue profitable growth opportunities, the retailer said.
"This transaction marks a milestone on the strategic priorities we outlined earlier this year," Michael J. Hennigan, president and CEO of Marathon Petroleum Corp., parent company of Speedway, said in a statement. "Our announcement crystalizes the significant value of the Speedway business, creates certainty around value realization and delivers on our commitment to unlock the value of our assets. At the same time, the establishment of a long-term strategic relationship with 7-Eleven creates opportunities to improve our commercial performance."
Upon closing, the companies said that 7-Eleven and Speedway “will share best practices to deliver products and promotions based upon customer demand and continue both companies' legacy of innovation. In addition, the combined company will be well-positioned to maximize efficiencies and optimize relationships with vendors and business partners.”
7-Eleven announced that it plans to form an integration steering committee with representatives from the leadership of both 7–Eleven and Speedway. “7-Eleven looks forward to welcoming the approximately 40,000 members of the Speedway team into the 7-Eleven family and integrating best practices of both companies,” the company said.
Convenience stores continue to take a share of the overall food retail industry, with both 7-Eleven and Speedway ranking high in Supermarket News’ annual Top 75 Retailers report. In 2020, 7-Eleven ranked 19th on the list with $17.76 billion in consumables sales, while Marathon Petroleum ranked 33rd with $6.31 billion in consumables sales from its Speedway, SuperAmerica, am/pm and Giant convenience stores.