TravelCenters of America Confirms BP Bid After Reviewing ARKO's Offer

Its board of directors cited a lack of committed financing as the bid's critical deficiency.
TravelCenters of America

WESTLAKE, Ohio — TravelCenters of America Inc. (TA) is making its intentions clear: the company will move forward with its $1.3 billion sale to BP despite ARKO Corp. making a case for itself as an alternate buyer.

One week after Richmond, Va.-based ARKO, parent company of GPM Investments LLC, sent a letter to TA's board of directors urging it to reconsider the chain's acquisition proposal and offering several points of clarification, TA confirmed that it engaged with ARKO to diligence its proposal following TA's request for and receipt of a contractual waiver from BP Products North America Inc.

Following the engagement, TA's board confirmed its recommendation that shareholders vote for the pending merger with BP.

TA reported that during its engagement with ARKO, the company confirmed that ARKO plans to finance its proposed $2.4 billion acquisition through an amalgamation of uncommitted funding sources. This includes entering into unnegotiated new and expanded credit facilities, entering into unnegotiated sale and leaseback transactions at unrealistic high real estate valuations, and using unavailable TA cash, the travel center operator stated.

ARKO also reportedly stated unequivocally that even in the case that it was granted access to more diligence, it did not plan to obtain a committed bridge loan to close a transaction with TA. It also confirmed that its discussions with an insurance provider were preliminary and that it did not know the costs to obtain such a policy.

TA responded in an April 24 letter to ARKO that it made available on its website.

The letter cited ARKO's failure to secure committed financing as the "critical deficiency" of its proposal, noting that in order for the board to make a good-faith determination that ARKO's proposal is or could be reasonably expected to lead to a superior proposal, it would need to be confident that ARKO has sufficient funds readily available to fund the closing of the deal.

"The board takes seriously our responsibility to act in the best interests of TA shareholders and maximize shareholder value," the directors wrote, adding their confidence that TA shareholders will not be distracted by ARKO's "highly conditional unfinanced proposal.

"The board continues to believe that the acquisition of TA by BP is in the best interests of shareholders and maximizes shareholder value and, therefore, reiterates its recommendation that TA shareholders vote in favor of the BP transaction," the letter concluded.

The special meeting of TA shareholders to approve the pending acquisition remains scheduled for May 10 at 9:30 a.m. Shareholders of record as of the close of business on March 23 will be eligible to vote. Subject to shareholder approval, the transaction is expected to close on May 15.

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.

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