UPDATED: Global Partners to Buy Alliance Energy's Portfolio
WALTHAM, Mass. -- Global Partners LP has signed a definitive agreement to acquire 100 percent of gasoline distributor and gas station/convenience store operator Alliance Energy LLP's membership interests for approximately $296 million. Upon closing of the deal, Global's geographic footprint will expand to Connecticut, Maine, New Jersey, New York, Pennsylvania and Vermont.
Based in Waltham, Mass., Alliance's portfolio consists of 542 gas stations and convenience stores: 234 in Connecticut, 109 in Massachusetts, 67 in Pennsylvania, 48 in Maine, 46 in New Hampshire, 23 in New York, 12 in Rhode Island, two in Vermont and one in New Jersey.
"We look forward to welcoming the Alliance team to the Global family and continuing to build our businesses together," Alliance President Andrew Slifka said this morning during a Global Partners conference call.
Alliance owns or has long-term leases with 257 locations -- 81 of which it also operates and 176 of which are operated by dealers and commissioned agents. It has supply contracts in place with the other 285 locations, according to the announcement. The majority of the Alliance-operated sites include attached convenience stores and feature co-branding arrangements with national retailers such as Dunkin' Donuts and Subway. The gas stations operate under a number of brands, including Mobil, Exxon, Shell, Sunoco, Gulf and CITGO.
As part of the deal, Global Partners will issue 5,850,000 limited partner units to Alliance's owners and assume long-term debt of approximately $180 million, the company said. The transaction, based on Global Partners' closing price of $19.89 per unit on Nov. 18, has an enterprise value of approximately $296 million. The companies expect the transaction to be accretive in the first full year of operation.
Approximately 95 percent of Alliance is owned by members of the Slifka family, which also owns Global GP LLC, general partner of Global Partners.
"The acquisition of Alliance significantly enhances the value of the partnership," said Eric Slifka, president and CEO of Global Partners. "Building on the success of our 2010 acquisition of the Mobil assets, this transaction creates additional vertical integration between our supply, terminaling, wholesale business and our expanding portfolio of gas station sites. Alliance is a premier, multi-brand, independent gasoline station and convenience store operator in the Northeast. We know Alliance and its business extremely well, as they currently serve as the management company for Global's Mobil assets. We view the company as an ideal fit for Global -- strategically, operationally, geographically and culturally."
With a total portfolio of more than 750 gas stations post-acquisition, Global’s combined gasoline distribution, gasoline station and related convenience store business will provide a strong, stable source of cash flow and further establishes Global Partners as one of the leading gasoline wholesalers, distributors and operators in the Northeast, according to Eric Slifka.
"As we have noted in the past, our board of directors reviews the distribution on a quarter-by-quarter basis. We expect that the board will evaluate our distribution next year in light of the earnings power of this transaction, as well as the outlook for our other businesses," he said.
Global GP's board of directors unanimously approved the terms of the deal based on the approval and recommendation of the board's conflicts committee, and expects the transaction to close during the first quarter of 2012. At that time, Alliance President Andrew Slifka will become president of Global Partners' retail business and join the board of Global GP.
"We value the financial and operational growth that Alliance has enjoyed under Andrew's leadership, as well as the excellent work that he and his management team have done in managing the day-to-day operations of our Mobil retail gas stations," said Eric Slifka. "Over the past 15 years, Alliance has created an outstanding asset base in the Northeast through acquisitions and organic growth, and we expect to build on that success."
In 2010, Global Partners purchased 190 Mobil-branded gas stations and attached c-stores in Massachusetts, Rhode Island and New Hampshire from Exxon Mobil Corp., as CSNews Online reported. At the time of the deal, it sought to negotiate a contract with Alliance for the management of the company-operated sites and the dealer relationships.