ARKO Corp. issued a letter to TravelCenters of America’s (TA) board, setting forth additional details of ARKO’s financing in connection with its proposal to acquire TA, and again asking for TA’s engagement with ARKO in the sale process.
The letter, as well as a Current Report on Form 8-K filed with the Securities and Exchange Commission on March 29, 2023, discloses a second amendment to ARKO’s Standby Real Estate Purchase, Designation and Lease Program agreement with Oak Street, a division of Blue Owl Capital, in which Oak Street has agreed, subject to the terms contained in the Program Agreement, to provide for an additional $1.25 billion of capacity specifically to finance ARKO’s acquisition of TA.
In addition to the additional capacity provided by the amended Program Agreement, ARKO has significant additional liquidity through cash, cash equivalents and availability under its existing credit lines. ARKO has never required any financing conditions and has closed every acquisition it has put under contract. ARKO’s proposal to TA offers no financing-related conditions.
TA’s board has refused to engage at all with ARKO since ARKO originally submitted, on March 14, 2023, a proposal of $92 a share, a nearly 7% premium to the $86 per share price pursuant to TA’s existing merger agreement with bp Products North America Inc. ARKO’s proposal was further improved on March 27, 2023, including ARKO’s willingness to pre-pay $202 million for 11 years of lease payments, using the same discount rate as bp’s proposal, in comparison to bp’s proposal to pre-pay $188 million for 10 years of lease payments.
ARKO believes it is riskless to TA’s stockholders for TA’s board to engage with ARKO, and that doing so could reasonably be expected to lead to a superior proposal. ARKO has retained financial and legal advisors for this transaction and believes this update merits immediate engagement by TA’s board, management and advisors.
ARKO is one of the most acquisitive operators of convenience stores in the United States, with 23 transactions completed since 2013 and one pending and expected to close in the second quarter of 2023. ARKO’s systematic growth strategy has consistently created compelling returns on invested capital.
ARKO believes its track record, strong financial position and confidence in obtaining financing for this transaction should be seriously considered by TA’s board and management when assessing whether ARKO’s proposal is in the best interests of TA’s stockholders.
ARKO is prepared to immediately commence confirmatory due diligence and quickly enter into an Agreement and Plan of Merger along with the other ancillary arrangements on the same material terms as in the Merger Agreement with bp.
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., it operates in four reportable segments: retail, which includes convenience stores selling merchandise and fuel products to retail customers; wholesale, which supplies fuel to independent dealers and consignment agents; 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; and GPM Petroleum, which sells and supplies fuel to retail and wholesale sites and charges a fixed fee, primarily to the fleet fueling sites.