Belfast Telegraph

Applegreen strikes deal for chain of 34 filling stations in US

By John Mulligan

Stockmarket-listed Irish forecourt retailer Applegreen has said it will continue to eye expansion opportunities in the eastern United States after buying a chain of filling stations in South Carolina.

Chief executive Bob Etchingham said more deals could be on the cards after its latest $75m (£58m) purchase.

Applegreen has agreed to buy a chain of 34 filling stations around South Carolina's state capital, Columbia.

And 11 of the stations include Burger King outlets, while they also have other food offerings, such as Subway. The deal also includes the acquisition of eight standalone Burger King sites.

Applegreen already has 17 Burger Kings at its forecourts in Ireland and more than 50 Subway outlets between the UK and Ireland.

Founded by Robert Brandi, the American chain operates 'Pitt Stop' stores at filling stations under a number of franchises with oil firms including Exxon, Mobil, Shell and Sunoco.

The business is being acquired by Applegreen under a sale and leaseback structure.

The Irish company is paying $5.4m (£4.2m) for the trade and certain assets of Brandi Group, and a US institutional investor will buy property assets of the business for $70.1m (£54m).

Once the transaction completes towards the end of this year, Applegreen will enter into a long-term lease arrangement with that property investor for the sites.

The business being acquired is currently generating annual adjusted earnings before interest, tax, depreciation and amortisation of about $3m (£2.3m).

Applegreen already operates 13 filling stations in the United States, in Long Island and Massachusetts. Last year it signed a deal to lease nine sites in Massachusetts from fuel distributor CrossAmerica Partners.

Mr Etchingham has said that Applegreen will probably bed down the latest acquisition over a one-to-two-year period before contemplating another US acquisition, but would remain opportunistic.

"We are opportunistic," he said.

"We regard the east coast as being where we would like to develop in the US.

"We wouldn't be averse to filling out between New England and South Carolina if the right opportunity came along."

The Applegreen boss said the way the Brandi deal is structured means that it de-risks the acquisition for his company.

"We were conscious of the fact that we're relatively new to the US and we don't have any in-depth knowledge of the South Carolina market, so this is a way of de-risking it to some extent," he said.

"It's a capital-light approach that we've taken.

"While the EBITDA is less than it could potentially be, we feel it's the right thing to do."

He added that one of the attractions of the deal is that Brandi Group is so heavily invested in food retailing.

Applegreen operates six sites in Northern Ireland. It has three major motorway services areas - two on both sides of the M1 at Lisburn and another at the M2 at Templepatrick - as well as three smaller outlets in Hillsborough, Ballymena and Coleraine.

Belfast Telegraph