Arko buys Empire’s fuel distribution business and retail locations

Arko has acquired Empire Petroleum Partners' fuel distribution business and retail locations.

Arko has acquired Empire Petroleum Partners’ fuel distribution business and retail locations. No financial terms were disclosed. The deal comes in the wake of Arko’s pending merger with Haymaker Acquisition Corp. II, a blank check company. The merger is expected to close in the fourth quarter of 2020, and will result in the combined company going public and trading on the NASDAQ under the ticker symbol “ARKO.” Empire is a portfolio company of American Infrastructure Funds.

PRESS RELEASE

RICHMOND, Va., Oct. 07, 2020 (GLOBE NEWSWIRE) — ARKO Holdings, Ltd. / GPM Investments, LLC (“Arko,” “GPM” or the “Company”), a rapidly growing leader in the U.S. convenience store industry, today announced the closing of the previously announced acquisition of Empire Petroleum Partners’ (“Empire”) fuel distribution business and retail locations. The acquisition meaningfully increases GPM’s scale and diversifies its business mix, while significantly increasing the Company’s cash flow through increased exposure to a highly ratable, consistent wholesale fuel distribution business, and brings its total site count to approximately 3,000 across 33 states.

“The completion of this highly strategic acquisition is an important milestone for Arko as we move forward with our business combination with Haymaker. This acquisition provides meaningful benefits through scale while increasing our competitiveness as an acquirer of choice,” said Arie Kotler, Chief Executive Officer of Arko and GPM. “With the closing of this transaction, we expect to double our annual fuel distribution to over 2 billion gallons on an annualized basis, while capturing significant synergies to drive increased profitability to the combined company.”

“Combined with our other strategic initiatives – including our continued core acquisition strategy as well as our planned aggressive remodeling program and compelling organic sales growth opportunities – this transaction further strengthens our confidence in our ability to drive significant growth and market share gains going forward,” said Kotler.
Steven Heyer, Chairman and CEO of Haymaker Acquisition Corp. II and former President and COO of the Coca-Cola Company, commented, “We could not be more excited about the closing of this transformative transaction for ARKO/GPM. It is emblematic of the tremendous opportunity set in front of the company, as well as the focused and disciplined approach that Arie and team take to executing and closing acquisitions. We believe the addition of Empire will generate meaningful value to the combined company going forward.”

The Empire business, one of the largest and most diversified wholesale fuel distribution businesses in the U.S., will add approximately 1,500 independently operated fueling stations to GPM’s existing fuel distribution network. Currently the seventh-largest convenience store chain in the U.S., GPM will also add approximately 85 company-operated convenience stores and will materially increase its footprint, expanding the Company’s reach into 10 new states of operation as well as the District of Columbia.
Empire’s wholesale fuel distribution business complements GPM’s retail business and will serve as an additional vehicle for the Company’s future acquisitions and organic growth. In addition, the acquisition will increase GPM’s scale, further diversify the Company’s existing cash flow and augment GPM’s strategic flexibility to rationalize sites between its retail and wholesale business. GPM will operate its wholesale division out of Empire’s Dallas, TX offices and will be transitioning Empire’s team to GPM as part of the transaction.

Empire is a portfolio company of American Infrastructure Funds (“AIM”). Barclays and Wells Fargo served as co-financial advisors to Empire. Capital One Securities, Inc. served as financial advisor to GPM Petroleum LP. In addition, Capital One, National Association serves as Administrative Agent, Lead Arranger and Bookrunner to GPM’s $500 million Revolving Credit Facility (the “Credit Facility”). KeyBanc Capital Markets Inc. and Santander Bank, N.A. also serve as Joint Lead Arrangers and Joint Bookrunners to the Credit Facility.

The closing of the transaction follows the Federal Trade Commission’s approval on August 25, 2020. GPM originally entered into an agreement to purchase Empire Petroleum’s business in December 2019.

The completed acquisition comes amid Arko’s pending business combination with Haymaker Acquisition Corp. II, a special purpose acquisition corporation (SPAC) (the “Business Combination”). The Business Combination, which is expected to close in the fourth quarter of 2020, is expected to result in the combined company becoming publicly-listed on the NASDAQ stock exchange under the ticker ARKO.

About GPM and Arko:
Based in Richmond, VA, GPM was founded in 2003 with 169 stores and has grown through acquisitions to become the 7th largest convenience store chain in the United States, with, prior to consummation of the Empire acquisition, 1,389 locations comprised of 1,250 company-operated stores and 139 dealer sites to which it supplies fuel, in 23 states. GPM operates in three segments: retail, which consists of fuel and merchandise sales to retail consumers; wholesale, which supplies fuel to third-party dealers and consignment agents; and GPM Petroleum, which supplies fuel to GPM and its subsidiaries selling fuel (both in the Retail and Wholesale segments).

Arko is the controlling shareholder of GPM and, as part of the Business Combination, the shares of Arko will be de-listed from Tel-Aviv stock exchange. At the closing of the Business Combination with Haymaker, Arko will have no material independent operating activities, income, or net assets, other than its ownership interest in GPM.

About American Infrastructure Funds:
AIM is a leading private investment firm based in the San Francisco Bay Area. With approximately $3 billion in assets under management, AIM brings innovative investment capital to support the growth of real property, infrastructure and natural resource-related businesses. For more information, please visit www.aimlp.com.

About Haymaker:
Haymaker is a $400 million blank check company formed for the purpose of entering into a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. Haymaker’s acquisition and value creation strategy is to identify, acquire and, after its initial business combination, build a company in the consumer, retail, media, or hospitality industries. Haymaker is led by Chief Executive Officer and Executive Chairman Steven J. Heyer, President Andrew R. Heyer, Chief Financial Officer Christopher Bradley, and Senior Vice President Joseph Tonnos. For more information about Haymaker, please visit www.haymakeracquisition.com.