TravelCenters of America (TA) announced that it has entered into a merger agreement with bp. Per the agreement, bp will acquire all of the outstanding shares of TA common stock for $86 per share in cash. The sale price represents an 84% premium to the average trading price of the 30 days ended Feb. 15, 2023, of $46.68. The total equity value is approximately $1.3 billion.
bp expects the acquisition to be accretive to free cash flow per share from 2024 and to deliver a return of over 15%.
“Today’s announcement that bp is acquiring TA for $86 per share is a result of the successful implementation of our turnaround and strategic plans. We have improved our core travel center business, expanded our network, launched eTA to prepare for the future of alternative fuels and improved our operating and financial results, none of which we could have accomplished without the hard work and dedication of our employees at every level,” said Jonathan M. Pertchik, CEO, TA.
The announcement is the culmination of a comprehensive process by TA’s board. Following the implementation of TA’s turnaround plan and several quarters of improved operating performance, TA received unsolicited interest to acquire the company. In response, TA’s board hired financial and legal advisors as part of a formal process to consider a potential sale of the company. This process ultimately included competitive rounds of bidding from potential buyers that resulted in the transaction announced.
TA’s strategically located network of highway sites complements bp’s existing predominantly off-highway convenience and mobility business, enabling TA and bp to offer fleets a seamless nationwide service. In addition, bp’s global scale and reach will, over time, bring advantages in fuel and biofuel supply as well as convenience offers for consumers. It will provide options to expand and develop new mobility offers including electric vehicle (EV) charging, biofuels, renewable natural gas (RNG) and later hydrogen, both for passenger vehicles and fleets.
“This is bp’s strategy in action. We are doing exactly what we said we would, leaning into our transition growth engines. This deal will grow our convenience and mobility footprint across the U.S. and grow earnings with attractive returns. Over time, it will allow us to advance four of our five strategic transition growth engines. By enabling growth in EV charging, biofuels and RNG, and later hydrogen, we can help our customers decarbonize their fleets. It’s a compelling combination,” Bernard Looney, CEO, bp, said.
A condition of the sale is the approval by shareholders who own a majority of TA’s shares outstanding. Service Properties Trust (SVC), which owns 7.8% of TA’s shares outstanding, and The RMR Group, which owns 4.1% of TA’s shares outstanding, both have agreed to vote their shares in favor of the sale. At the closing of the transaction, TA will terminate its management agreement with RMR pursuant to the terms of the agreement and pay a termination fee to RMR that is currently estimated to be approximately $44 million. Subject to shareholder and regulatory approval, the parties are targeting closing the acquisition by mid-year 2023.
The transaction was unanimously approved by the TA board of directors. Citigroup acted as exclusive financial advisor to TA and Ropes & Gray as TA’s legal advisor in connection with the transaction.
TravelCenters of America was founded in 1972 and headquartered in Westlake, Ohio. Its over 18,000 team members serve guests in 281 locations in 44 states, principally under the TA, Petro Stopping Centers and TA Express brands. Offerings include diesel and gasoline fuel, truck maintenance and repair, full-service and quick-service restaurants, travel stores, car and truck parking, and other services dedicated to providing great experiences for its guests. TA is committed to sustainability, with its specialized business unit, eTA, focused on sustainable energy options for professional drivers and motorists. TA operates over 600 full-service and quick-service restaurants and nine proprietary brands, including Iron Skillet and Country Pride.
bp’s ambition is to become a net zero company by 2050 or sooner and to help the world get to net zero. bp is a top energy investor in America since 2005, investing more than $130 billion in the economy and supporting about 230,000 jobs.