M&A: Murphy buys QuickChek aiming to boost margins with food

摘要

Fuel and convenience-store retailer Murphy USA said it agreed to acquire QuickChek in a $645 million all-cash deal with an aim to boost margins in the COVID-19 environment with better food-and-beverage offerings at all stores. The transaction represents a reversal of Murphy’s strategy of building new-to-industry stores. It follows the November announcement of another large deal that will put Casey’s General Stores – a retailer that also emphasizes new-builds rather than acquisitions – in the fuel distribution business. These strategic moves underscore M&A as a means to grow scale and increase profits in a reduced-sales environment during the pandemic. In August, 7-Eleven parent Seven & i agreed to buy nearly 4,000 stores from Marathon Petroleum Corp. Other c-store operators such as Alimentation Couche-Tard Inc. and GPM Investments are likely to remain active players in gobbling up smaller rivals. In a conference call following Murphy’s announcement, Andrew Clyde, CEO of Murphy USA, said that an acquisition represents the retailer's best option to improve food and beverage offerings and profit margins at its stores, citing the high costs to build that capability on its own. Murphy USA said the purchase price included expected tax benefits of $20 million, valuing the transaction at a net, after-tax purchase of $625 million. The fuel retailer said it expects annual cost savings of $28 million by the third year after deal completion, and the deal would be accretive to earnings during its full year 2022, the first full year after its expected completion during Q1 2021.