GPM Investments and Arko Holdings have entered into definitive agreements for a business combination with Haymaker Acquisition Corp. II, pending shareholder approval. The transaction is expected to close in the fourth quarter of 2020.
Based in Richmond, Va., GPM has grown its store count from 320 stores in 2011 to 1,393 locations as of June 30 in 23 states comprised of 1,266 company-operated stores and 127 additional sites to which it supplies fuel. The company 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 company stores as well as subwholesalers and bulk purchasers.
The combined company will be led by GPM’s current management team, including CEO Arie Kotler. Arko and GPM will also benefit from Haymaker’s investing and operational experience at Fortune 500 companies, particularly in the consumer and hospitality sectors.
Shares of Arko Holdings will be de-listed from the Tel-Aviv stock exchange, and Arko will be listed on Nasdaq in the U.S.
“We have an established platform for identifying and integrating successful acquisitions in the growing, fragmented and historically recession resilient convenience store industry as well as attractive organic sales and profitability drivers,” said Arie Kotler, CEO of Arko and GPM. “This transaction provides us with increased liquidity and access to the broader capital markets, enabling us to continue to execute on our proven growth strategy as we expand our network of convenience stores across the United States.”
Given substantial rollover from existing equityholders, upon completion of the transaction, pro-forma leverage, defined as Net Debt to 2020E Pro Forma Adjusted EBITDA, is expected to be approximately 1.7x. The combined company is anticipated to have an equity market capitalization at closing of approximately $1.4 billion.
Anticipated total enterprise value, pro-forma for the pending acquisition of Empire Petroleum which GPM anticipates closing in the beginning of the fourth quarter of 2020, is expected to be approximately $2 billion, or about 9x GPM’s 2021E Pro Forma Adjusted EBITDA.
“We believe Arko and GPM, with their established platform for growth, talented and driven management team, and demonstrated success operating in an attractive end market, will drive value for all stakeholders,” said Steven Heyer, CEO and Executive Chairman of Haymaker. “Given the current environment, the company’s resilient business model is particularly relevant, the inherent growth drivers extremely compelling, and their disciplined execution commendable. We are excited to continue to work with Arie and his team as we broaden the shareholder base globally at the newly combined company and build on their successful track record of growth.”