7-Eleven parent firm to buy 1,100 Sunoco convenience stores in $3.3B deal
File photo taken in 2002 shows a 7-Eleven sign in Pembroke Pines, Florida.
Your favorite Sunoco gas station likely will soon have a new operator: 7-Eleven.
The parent company of the U.S. snack and convenience store chain announced a Thursday agreement to buy more than 1,100 convenience locations from Sunoco (SUN) in a $3.3 billion deal that will escalate the company's U.S. expansion plans.
One of the largest acquisitions ever by Seven & I, the planned transaction includes most of the stores Sunoco currently operates in tandem with gas stations in 18 states, mostly in the Eastern U.S. and Texas, according to an announcement by the Japan-based company.
The deal would boost 7-Eleven's total number of stores to 9,815 in the U.S. and Canada. Seven & I said it agreed to buy gasoline from Sunoco for 15 years as part of the transaction terms. The deal is an acquisition agreement and does not involve any assumption of interest-bearing debt, the company said.
"This acquisition supports our growth strategy in key geographic areas including Florida, mid-Atlantic states, Northeast States and Central Texas," Joe DePinto, the President and CEO of 7-Eleven, said in a statement issued with the announcement.
The deal is expected to close in the second half of 2017, subject to regulatory approvals.
The transaction stems from a medium-term management plan Seven & I announced in October to expand 7-Eleven's store network and strengthen its merchandising capability. The plan aims at achieving daily per-location sales of $5,000 and 10,000 total stores by the fiscal year ending in February 2020, the company said.
In a similar but smaller deal announced in June, Seven & I bought 79 CST Brands gas stations and convenience stores in California and Wyoming.
Sunoco said the deal marks the first step in the energy company's strategic shift away from operating company-owned convenience stores and instead focusing on its fuel supply business. The company plans to use proceeds from the transaction to pay down Sunoco debt and other corporate purposes.
"Our supply agreement with 7-Eleven provides SUN with a predictable long-term income stream, and this transaction quickly allows SUN to improve its financial profile, company President and CEO Bob Owens said in a formal announcement of the deal.
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