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Grow or Die Still a Retail Mantra

Merger-and-acquisition activity is on the upswing in the c-store industry.
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Last fall, in our annual Top 100 report, Convenience Store News noted that rapid merger-and-acquisition (M&A) activity in the convenience store industry was slowing down compared to previous years. The year prior was marked by 7-Eleven's bold acquisition of Speedway. 2020 saw Murphy USA buy Mid-Atlantic regional chain QuickChek and the year before that, U.K.-based EG Group made its presence felt with the acquisition of Kroger's convenience store portfolio, before adding to its store count with the purchase of East Coast powerhouse Cumberland Farms.

The relative lack of blockbuster M&A deals last year led some to think the larger "consolidators" in the channel were taking a breather. Commenting on the state of M&A last fall, Terry Monroe of American Business Brokers & Advisors said: "There is not much to buy; that's why you're not seeing much announced. There is more money chasing fewer deals. It still comes down to supply and demand. There is a huge demand from investors and other operators to purchase, but very little supply."

Globally, M&A activity shrank to its lowest level in more than a decade in the first quarter of 2023. Analysts blamed rising interest rates, high inflation and fears of a recession for souring the appetite of companies looking to make major purchases.

However, the old retail maxim of "grow or die" remains true. In retailing, if you're not growing, you're dying. Just in the last two months, we've seen three major deals announced through which nearly 1,000 stores will change hands. These deals were supplemented by another four modest acquisitions that included more than 100 stores.

In the month of April alone, we reported:

  • Tri Star Energy, parent company of Twice Daily, acquired 54 stores from Cox Oil.
  • Love's bought 22 c-stores and travel centers from EZ GO Convenience Stores.
  • Petroleum Marketing Group purchased 43 Short Stop stores.
  • BP finalized a deal to acquire 281 travel centers from TravelCenters of America.
  • Maverik is swallowing up a company its own size by buying 400-plus-unit Kum & Go.
  • Circle K and Majors Management are splitting up the 300-plus-store MAPCO chain.

For dessert, Circle K gobbled up 10 Dion's Quik Marts from Uphoff Ventures as well.

I expect M&A activity to continue this year as companies adapt to the tougher economic climate. In addition, I think the supply of companies interested in being acquired will increase as operators face the hard truths about the investments needed for long-term success in the convenience store industry — technology, labor, electric vehicle chargers, etc.

The relative lack of major deals last year resulted in little change among the top-ranked retailers on this year's Top 100 list. If the more heated M&A activity of the past few months continues, it'll be very interesting to see what changes are wrought among the biggest convenience channel players.

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