CST Brands Inc., a San Antonio-based Fortune 500 fuel and convenience retailer, has entered into an exclusivity agreement to finalize the terms of the definitive agreement for CST to acquire 100% of the outstanding shares of Flash Foods Inc. and certain related entities in Georgia and Florida from the Jones Co.
The closing of this purchase, which CST Brands told CSD is expected to close in the first quarter of 2016, would represent the largest network acquisition in CST’s history and is anticipated to open up a dynamic new region for growth for the company.
“The acquisition of Flash Foods expands CST’s market presence into new markets in the Southeast, adds sizable fuel volume to its network that creates cost efficiencies, and enables CST to leverage various marketing and technological capabilities that will strengthen its value proposition,” David Bishop, managing partner, Balvor LLC, told CSD.
“Like our Nice N Easy Grocery acquisition, Flash Foods is a strong regional brand with great, loyal customers, who we look forward to delighting every day,” Kim Lubel, chairman and CEO of CST Brands told CSD. “Certainly, the goal of our Corner Store long-term brand strategy is to create such strength behind the value of the Corner Store brand that it is known and valued in every market, however we’re not there yet. For the foreseeable future, we expect to learn from and build on the success of the Flash Foods network.”
“Our strategic vision is to be in markets where we can grow through both organic and acquisitive growth as well as grow inside the store,” Lubel added. She noted CST Brands views both Georgia and Florida as strong growth markets, “not just with the solid existing base of 164 Flash Foods stores, but also with the land bank included in the Flash Foods acquisition, which affords us the opportunity to build several new-to-industry stores in and around the existing Flash Foods network. The Florida and Georgia markets are attractive growth markets for us—and also for others as evidenced by some of the other strong players operating in the region. That said, we compete in active markets across our network and expect to continue our success in this new market,” Lubel said.
The acquisition is expected to include the following:
• 164 Flash Foods convenience stores selling Flash Foods-branded fuel located in Georgia and Florida
• 21 branded Quick Service Restaurants, including three standalone locations
• A land bank of 15 real estate sites to build new-to-industry stores
• A merchandise distribution company operating a 90,000 square foot distribution center in Georgia
• A fuel supply company with access to the Colonial and Plantation Pipelines, leased storage and company-owned transportation fleet, distributing fuel to the 164 sites in addition to 10 million gallons to wholesale accounts.
This purchase would create the opportunity for CST to extensively grow its network both by acquiring the existing stores, which average 3,000 square feet, and also provides a new foothold to build its larger new-to-industry stores, strengthened by the successful Flash Foods network. The purchase would also allow CST and its controlled subsidiary, CrossAmerica Partners LP to connect regional networks across the mid-Atlantic and southern regions of the United States.
Flash Foods is known in the industry as an innovative company and a leader in its use of technology.
“With our largest network purchase to date, we are excited to work with the great people at Flash Foods,” said Lubel. “The Jones family, along with their accomplished leadership team, has built a strong company with a customer-focused culture that aligns perfectly with CST’s core values and strategic vision for growth. We are looking forward to entering this new market with such a solid foundation in Flash Foods, headquartered in Waycross, Ga.”
“We are happy to have selected CST Brands from a formidable group of potential buyers,” said Jimmy Jones, chairman and CEO of Flash Foods. “We believe the service culture at CST Brands, and its attitude towards both customers and team members makes CST a great fit for the Flash Foods team. We are excited to work together on finalizing this transaction.”
The Jones Co. is being advised in the transaction by Fifth Third Securities, a subsidiary of Fifth Third Bank.
While both parties intend to finalize a definitive agreement as soon as practicable, CST and The Jones Co. may not be able to reach a definitive agreement or consummate the proposed transaction.