ARKO Corp. announced that subsidiaries of ARKO have agreed to acquire the retail, wholesale and fleet fueling assets of WTG Fuels Holdings LLC. WTG is the owner of Uncle’s Convenience Stores and GASCARD fleet fueling operations.
Founded in 1976, WTG is a Texas convenience store operator with 24 company-operated Uncle’s Convenience Stores across western Texas. This acquisition would enhance ARKO’s footprint in these attractive markets and bring its fas REWARDS loyalty program and favorable assortment to a broader group of consumers. The transaction also includes three land parcels and nine independent dealer locations. The company has also agreed to acquire WTG’s 57 proprietary GASCARD-branded fleet fueling cardlock sites and 52 private cardlock sites, one of the largest fleet fueling operations in West Texas. ARKO’s fleet fueling segment expects to leverage its marketing and operations knowledge to manage fleet fueling sites and create value for customers.
“We are committed to creating value for our stockholders with a systematic, convenience-store focused long-term growth strategy focused on disciplined and accretive transactions,” said Arie Kotler, ARKO’s chairman, president and CEO. “We believe that we add significant value to acquisitions with our excellent integration capacity, which has helped accelerate the pace of dealmaking, which in turn improves our business, creates more efficiencies and funds future growth — a virtuous cycle that we believe sets ARKO apart as a leading convenience store operator and acquirer of choice. Adding these assets to our Family of Community Brands is perfectly aligned with ARKO’s strategy, and we look forward to welcoming WTG employees to our company.”
Uncle’s is a popular West Texas destination that anchors its markets with convenient grocery, beer and fresh food options. It is known for its high-quality foodservice, including Uncle’s-branded fresh food, Hunt Brothers Pizza and Champs Chicken. Certain stores also have walk-in beer caves. Uniquely, Uncle’s Convenience Stores has had very strong diesel sales, which currently comprises over one-third of its overall fuel volume.
GASCARD’s 57 proprietary fleet fueling cardlock sites are strategically located in large industrial areas in West Texas and southeast New Mexico and service a diverse base of customers. The company also operates 52 private cardlock sites. Nearly three-fourths of fuel sales by volume at the cardlock locations have been diesel. In addition, the business issues fuel cards that provide customers access to a nationwide network of fueling sites.
ARKO’s Year of Growth
ARKO’s agreement to acquire WTG’s convenience store, fleet fueling business and independent dealer locations is the company’s fourth announced acquisition of 2022. Together with the recently announced Pride Convenience Holdings and Transit Energy Group (TEG) transactions, the acquisition of WTG’s assets highlights the company’s systematic growth strategy designed to increase the company’s cash flow and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA). Combined, WTG, Pride and TEG are expected to grow the company’s base of convenience stores by approximately 15%, adding over 200 retail stores and a pipeline of new build opportunities.
WTG would greatly expand ARKO’s highly accretive fleet fueling segment, growing from 183 sites at the end of the third quarter of 2022 to over 290 upon closing.
WTG sold approximately 85 million total gallons in fiscal year 2021 across its stores, fleet fueling and independent dealer locations.
“We believe that Uncle’s stores are great sites, and, importantly, we are strategically using our in-house fleet fueling expertise to grow that segment. We are highly focused on our core convenience store business and have been very pleased with the performance of the fleet fueling segment and the cash flow it generates,” noted Kotler.
ARKO Corp. is a Fortune 500 company that owns 100% of GPM Investments LLC and is one of the largest operators of convenience stores and wholesalers of fuel in the United States. Based in Richmond, Va., its highly recognizable family of community brands offers prepared foods, beer, snacks, candy, hot and cold beverages and multiple popular quick-service restaurant brands. Its high-value fas REWARDS loyalty program offers exclusive savings on merchandise and gas. It operates in four reportable segments: retail, which includes convenience stores selling fuel products and other merchandise to retail customers; wholesale, which supplies fuel to independent dealers and consignment agents; GPM Petroleum, which sells and supplies fuel to ARKO’s retail and wholesale sites; and fleet fueling, which includes the operation of proprietary and third-party cardlock locations and issuance of proprietary fuel cards that provide customers access to a nationwide network of fueling sites.