RICHMOND, Va. — GPM Investments LLC's parent company inked a letter of intent (LOI) for a business combination with Haymaker Acquisition Corp. II, a publicly traded special purpose acquisition company.
The business combination would result in 100 percent of both GPM and Arko Holdings Ltd. combining with Haymaker with substantial rollover from existing equity holders. Currently, Arko owns 68 percent of GPM; the remaining 32 percent is held by Davidson Kempner Capital Management LP, funds managed by Ares Management Corp., and Harvest Partners SCF LP.
Under the terms of the LOI, the enterprise value of the combined company is approximately $1.5 billion. Haymaker and Arko will announce additional details when a definitive agreement is executed, which is expected to occur in the third quarter. The transaction is expected to close before year's end.
Based in Richmond, GPM was founded in 2003 with 169 convenience stores. Arko acquired control in 2011 and has grown the company through acquisition to become a leading c-store operator with 1,400 locations in 23 states. GPM operates 1,272 stores and delivers fuel to an additional 128 sites.
The company operates in three segments: retail, wholesale and GPM Petroleum, which supplies fuel to company stores as well as independent operators and bulk purchasers.
"I am very excited about this combination. We have a demonstrated history of profitable growth and a track record of executing consolidation opportunities. Combining with Haymaker as a Nasdaq-listed, pure-play operator of convenience stores greatly enhances our ability to execute our growth strategy in a large, growing, recession resistant industry, while driving value for our combined shareholders," said Arie Kotler, CEO of Arko and GPM.
The combined company will be led by GPM's current management team.
"The proposed transaction with Arko and GPM meets all of the strategic criteria we developed for Haymaker. This is a sizeable transaction at approximately $1.5 billion in enterprise value, with a business that has scale, geographic diversity and significant growth opportunities, led by [Kotler] and a strong management team with public market experience," said Steven Heyer, CEO and executive chairman of Haymaker.
"We intend to continue growing the GPM platform and to pursue strategic initiatives jointly with [Kotler], a proven consolidator and operator. The structure of the proposed business combination is also appealing — we expect long-term institutional investors and management to roll over significant equity at an attractive valuation relative to U.S.-listed peers," he added.
When the transaction closes, Arko would be delisted from the Tel Aviv Stock Exchange and the combined company would be traded on the U.S. Nasdaq. The deal would need approvals from the companies' boards and shareholders as well as regulators.
Raymond James & Associates Inc. is serving as financial and capital markets advisor, Cantor Fitzgerald & Co. is serving as capital markets advisor, Stifel, Nicolaus & Co. Inc. and Citigroup Global Markets Inc. are serving as co-financial advisors and capital markets advisors, and DLA Piper LLP (US), Gornitzky & Co. and Ellenoff Grossman & Schole LLP are serving as legal advisors to Haymaker.
Greenberg Traurig LLP and S. Friedman & Co. are acting as legal advisors to Arko and GPM.
More information on the proposed transaction can be found in an investor presentation. To view the presentation, click here.