Flying J & Pilot Merger Date Pushed Back

OGDEN, Utah and KNOXVILLE, Tenn. -- The "drop-dead date" for the merger of truck stop operators Flying J and Pilot Travel Centers, originally set for March 31, was extended to April 30, The Trucker reported. After this date, neither party has any obligation to complete the merger.

In addition, the exclusivity period also was extended, during which time Flying J agrees not to have discussions with other acquirers and/or investors, the report stated.

It appears the merger is all ready to go, as due diligence has been completed, the transaction documents are drafted, the specified consents from ConocoPhillips and Shell Oil have been received, more than $2 billion in financing has been arranged, and the reorganization plan filed with the bankruptcy court was approved by creditors.

The one detail standing in the way is the approval of the government's antitrust authorities. Customers, competitors, suppliers and the government are concerned the new combined entity will be the "800-pound gorilla" with more than 600 locations, $20 billion in revenue (depending on the price of fuel), $700 million in operating profits and a dominant 20-percent market share of the "on road" diesel fuel market, according to the report.

Both Flying J and Pilot agreed to work together to overcome the antitrust issues that are both national and local in scope. The combined entity may need to divest some of its locations because of its combined market dominance in a certain geographic area, presenting an opportunity for competitors to purchase quality locations at an attractive price.

Flying J filed for bankruptcy in December 2008, and entered into a merger agreement with Pilot to merge their truck stop operations in July 2009. Since that time, Flying J has sold or refinanced a number of operations, including Longhorn Pipeline, oil and gas assets, its Bakersfield refinery and other miscellaneous assets.

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