7-Eleven to Buy Sunoco Stores in $3.3B Mega-Store Deal

Pact includes 1,100-plus sites, Laredo Taco and Stripes trademarks.

April 6, 2017, 03:00 pm

IRVING, Texas — 7-Eleven Inc. is taking a major step to growing its footprint with a deal to acquire approximately 1,108 convenience stores from Sunoco LP.

Total consideration for the transaction is $3.3 billion in cash, plus fuel, merchandise and other inventories. Sunoco expects to use the proceeds to repay indebtedness and for general partnership purposes.

"The sale of these retail assets to 7-Eleven is the beginning of an exciting evolution for Sunoco into a premier nationwide fuel supplier," said Sunoco President and CEO Bob Owens. "Our supply agreement with 7-Eleven provides Sunoco with a predictable long-term income stream, and this transaction quickly allows Sunoco to improve its financial profile."   

The stores, which are just part of the asset purchase agreement, are located in 18 states. The transaction is expected to close in the second half of this year.

"This acquisition supports our growth strategy in key geographic areas including Florida, Mid-Atlantic states, Northeast states, and Central Texas," said Joe DePinto, president and CEO of 7-Eleven Inc. "It also provides 7-Eleven entry into Houston, the fourth largest city in the United States, and a strong presence in Corpus Christi and across South Texas."

Irving-based 7-Eleven has 8,707 stores in the United States and Canada. This acquisition will be one of the largest in the retailer's history, and it will bring 7-Eleven's total number of stores to 9,815 in the U.S. and Canada.

In addition to the convenience stores, the transaction includes the associated trademarks and intellectual property of Sunoco's Laredo Taco Co. and Stripes brands.  

As part of the transaction, Dallas-based Sunoco will enter into a 15-year take-or-pay fuel supply agreement with a 7-Eleven subsidiary, under which Sunoco will supply approximately 2.2 billion gallons of fuel annually. This supply agreement will have guaranteed annual payments to Sunoco, provides that 7-Eleven will continue to use the Sunoco brand at currently branded Sunoco stores, and includes committed growth in future periods.

According to Sunoco, approximately 200 additional c-stores in North and West Texas, New Mexico and Oklahoma will be sold in a separate process.

Sunoco's Aloha Petroleum business unit in Hawaii will continue to operate "its highly efficient and integrated business model within Sunoco. Likewise, the transaction does not include Sunoco's highly successful APlus franchisee-operated stores," the company said.

The deal is the first step in Sunoco's strategic shift away from company-operated convenience stores to focus on its fuel supply business. Led by the Sunoco fuel brand and the APlus franchise, Sunoco plans to be a leading consolidator in the domestic wholesale fuels business, supplying fuel to a network of more than 8,900 locations of third-party dealers, distributors and other commercial customers, with an enhanced focus on master-limited partnership qualifying income. 

Additionally, the proceeds received in this transaction will be used to further enhance Sunoco's credit profile and leverage profile, according to the company.

J.P. Morgan Securities LLC served as Sunoco's exclusive financial advisor for the transaction. In addition, it has has retained JP Morgan to market the approximately 200 remaining convenience stores in North and West Texas, New Mexico and Oklahoma.  

Akin Gump Strauss Hauer & Feld LLP represented 7-Eleven in the transaction, with Thomas H. Yang, a partner in the firm's Dallas office acting as lead attorney for the retailer.

Sunoco is a master limited partnership that operates approximately 1,340 retail fuel sites and convenience stores (including APlus, Stripes, Aloha Island Mart and Tigermarket brands) and distributes motor fuel to convenience stores, independent dealers, commercial customers and distributors located in more than 30 states at approximately 6,900 sites. Energy Transfer Equity LP owns Sunoco's general partner and incentive distribution rights.