“This acquisition is the largest in our company’s history and will allow us to continue to grow and diversify our presence in the U.S., particularly in the Midwest and East Coast,” said Joe DePinto, President and CEO of 7-Eleven. “By adding these quality locations to our portfolio, 7-Eleven will have the opportunity to bring convenience to more customers than ever before.”
The acquisition accelerates 7-Eleven’s growth trajectory and diversifies its presence in the U.S.; Speedway and 7-Eleven have complementary geographic footprints with little overlap.
The acquisition will bring 7-Eleven’s total number of stores to approximately 14,000 in the U.S. and Canada. Following the transaction, 7-Eleven will have a presence in 47 of the top 50 most populated metro areas in the U.S.
In addition, the acquisition strengthens the company’s financial profile. Speedway, with annual pre-synergy run-rate EBITDA of approximately $1.5 billion prior to the acquisition, offers significant opportunities for future growth. 7-Eleven expects to achieve $475 million to $575 million of run-rate synergies through the third year following closing, while maintaining financial flexibility and a strong balance sheet. Upon closing, 7-Eleven will be even better positioned to continue to pursue profitable growth opportunities.
Upon closing, 7-Eleven and Speedway will share best practices to deliver products and promotions based on customer demand and continue both companies’ legacy of innovation. In addition, the combined company will be well-positioned to maximize efficiencies and optimize relationships with vendors and business partners.
7-Eleven plans to form an integration steering committee with representatives from the leadership of both 7–Eleven and Speedway. 7-Eleven will welcome the approximately 40,000 members of the Speedway team into the 7-Eleven family and integrate best practices of both companies.
7-Eleven reaffirms and expands the company’s existing commitment to important environmental priorities as a part of its broader Environmental, Social and Governance (ESG) efforts. Together, the combined company will set mutual and shared 2027 targets to reduce carbon dioxide emissions, to utilize more eco-friendly packaging and sustainable food supplies and to drive reduction in plastic usage.
On a pro forma basis, the transaction reflects an attractive EBITDA multiple of 7.1x after taking into account expected impacts from the transaction, including $475 million to $575 million of run-rate synergies, $3 billion of tax benefits and $5 billion of net sale leaseback proceeds.
The transaction is expected to produce compound annual growth in 7–Eleven’s operating income and EBITDA of over 15% through the first three years following the close of the acquisition. 7-Eleven expects to reduce its debt-to-EBITDA ratio to less than 3.0x within two years following the close of the acquisition.
The transaction is subject to customary regulatory approvals and closing conditions and is expected to be completed in the first quarter of 2021.