ARKO Provides Financial Update in Bid for TravelCenters of America
RICHMOND, Va. — ARKO Corp. continues to make a case for a merger-and-acquisition deal with TravelCenters of America Inc. (TA).
On March 29, the parent company of GPM Investments LLC issued a letter to TA's board of directors with additional details of its financing in connection with its $92-per-share offer, and again asked for TA to engage with ARKO about a possible sale.
The letter, as well as a Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission, discloses a second amendment to ARKO's Standby Real Estate Purchase, Designation and Lease Program agreement with Oak Street, a division of Blue Owl Capital in which Oak Street has agreed, subject to the terms contained in the program agreement, to provide an additional $1.25 billion of capacity specifically to finance ARKO's acquisition of TA.
In addition, ARKO has significant additional liquidity through cash, cash equivalents and availability under its existing credit lines. ARKO has never required any financing conditions and has closed every acquisition it has put under contract. The company's proposal to TA offers no financing-related conditions, according to ARKO.
The Richmond, Va.-based company submitted an unsolicited offer to TA on March 14 — a proposal above the $86-per-share offer that BP and TA agreed to in February. TA's board subsequently decided, although higher, ARKO's offer was not a superior offer to the $1.3 billion deal it reached with BP.
According to ARKO, it improved its offer on March 27 when it noted its willingness to pre-pay $202 million for 11 years of lease payments, using the same discount rate as BP's proposal, in comparison to BP's proposal to pre-pay $188 million for 10 years of lease payments.
"ARKO believes it is riskless to [TA's] stockholders for [its] board to engage with ARKO, and that doing so could reasonably be expected to lead to a superior proposal," the company said. "ARKO has retained financial and legal advisors for this transaction and believes this update merits immediate engagement by [TA's] board, management and advisors."
ARKO Corp. owns 100 percent of GPM Investments and is one of the largest operators of convenience stores and wholesalers of fuel in the United States. It operates in four reportable segments: retail, which includes convenience stores selling merchandise and fuel products to retail customers; wholesale, which supplies fuel to independent dealers and consignment agents; fleet fueling, which includes the operation of proprietary and third-party cardlock locations, and issuance of proprietary fuel cards that provide customers access to a nationwide network of fueling sites; and GPM Petroleum, which sells and supplies fuel to our retail and wholesale sites and charges a fixed fee, primarily to its fleet fueling sites.
Westlake, Ohio-based TravelCenters of America Inc. is the nation's largest publicly traded full-service travel center network. Founded in 1972, its more than 18,000 team members serve guests in 281 locations in 44 states, principally under the TA, Petro Stopping Centers and TA Express brands. Offerings include diesel and gasoline fuel, truck maintenance and repair, full-service and quick-service restaurants, travel stores, car and truck parking, and other services dedicated to providing great experiences for its guests.
TA is committed to sustainability, with its specialized business unit, eTA, focused on sustainable energy options for professional drivers and motorists.
The operator has more than 600 full-service and quick-service restaurants and nine proprietary brands.