7-Eleven parent to buy US convenience store Speedway for $21b

Marathon Petroleum has agreed to sell its Speedway gas stations in the United States to Japanese retail group Seven & i Holdings for $21 billion, the companies said, five months after the deal was put on hold amid the coronavirus outbreak.

Marathon, under pressure from activist investor Elliott Management, said last year it would launch sweeping restructuring, including spinning off Speedway, which it said was worth as much as $18 billion, including debt.

After-tax proceeds from the sale, which has been approved by the boards of both companies, are estimated at $16.5 billion, Marathon said, adding it will use the proceeds to pay existing debt.

For Seven & i, owner of the 7-Eleven convenience store chain, the deal helps it shift its focus beyond a saturated Japan market, multiplying its portfolio of U.S. gas stations and corner stores acquired through a $3.3 billion deal with Sunoco in 2017.

7-Eleven said the latest deal will bring its store count in the United States and Canada to about 14,000.

The deal, which is expected to close in the first quarter of 2021, includes a 15-year fuel supply agreement for about 7.7 billion gallons per year associated with the Speedway business, said Marathon, the largest U.S. refiner by volume.

The Japanese company abandoned the deal in March, according to sources at the time, due to worries about the price tag – reportedly around $22 billion – especially due to growing concerns about global economic slowdown amid the virus outbreak.

Many analysts and investors had said the initially reported deal price was too high. But some also said it still made sense for Seven & i to expand further in North America.

In Japan, the convenience store chain faces a slow economy as well as tough competition from rivals such as FamilyMart and Lawson, as well as discount drugstores and online retail giants like Amazon.com.

7-Eleven also said it expects to achieve $475 million to $575 million of synergies through the third year after the deal’s closing.

The deal will also produce compound annual growth over 15% in 7–Eleven’s operating income through the first three years after closing, the company said. It added the purchase price reflected $3 billion in tax benefits.

Seven & i, Canadian convenience store operator Alimentation Couche-Tard and private equity firm TDR Capital had prepared rival bids late last month for Speedway, Reuters reported in July.

Reuters

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.