Convenience store operator Murphy USA, based in El Dorado, AR, has agreed to acquire another c-store retailer, QuickChek Corporation, in an all-cash transaction for $645 million. The purchase includes expected tax benefits valued at $20 million for a net after-tax purchase price of $625 million.
The transaction, announced on December 14, 2020, will be financed with a combination of cash on hand, existing credit facilities and new debt, and Murphy USA has obtained committed financing from the Royal Bank of Canada.
QuickChek, based in Whitehouse Station, NJ, was founded in 1967 as an extension of Durling Farms, a door-to-door milk and fresh dairy products delivery service that originally opened in 1888. It remains a family-owned chain of 157 stores located in central and northern New Jersey and the New York metro area, 89 of which offer fuel. Its total per-store sales average is among the industry’s best at about $3.5 million per unit including fuel.
Additionally, combined merchandise margins are 38 percent, according to the company, and food and beverage represents more than 50 percent of QuickChek’s overall mix.
The acquisition is consistent with Murphy USA’s updated capital allocation strategy as announced by the publicly-traded company in October. That strategy, according to Murphy USA, represents a continued commitment to deliver exceptional and sustained value to long-term shareholders and will complement other ongoing value creation mechanisms, including ongoing productivity improvement initiatives, organic growth, share repurchase and a dividend.
“In October we outlined an updated capital allocation strategy and committed to improving our food and beverage offer at existing and future sites,” said Murphy USA president and CEO Andrew Clyde. “This transaction greatly accelerates those efforts and benefits and is expected to provide reverse synergies across our network, while enhancing future returns on new stores. The transaction is also expected to create direct synergies that leverage our enterprise scale and our distinctive capabilities in fuel, tobacco and loyalty. We are excited to join forces with an exceptional and highly engaged team at QuickChek who share Murphy USA’s passion for delivering excellence every day to all our stakeholders.”
“QuickChek and Murphy USA both reflect a family heritage and a strong people culture,” said QuickChek CEO and chairman Dean Durling. “I am thrilled by Murphy USA’s commitment to honor our legacy and preserve our brand while learning from our business model. I am proud of what we have accomplished in making QuickChek what it is today and I am excited about the opportunities for continued growth and success in the next chapter in QuickChek’s journey. I know QuickChek’s dedicated employees and valued customers remain in good hands.”
In its announcement, Murphy USA noted that its net investment of $625 million represents a multiple of 13.2 times QuickChek’s estimated last 12 months earnings.
The Arkansas-based food and fuel merchant said annual run rate synergies of $28 million are expected to be achieved by the third year. When taking into account expected run-rate synergies and tax benefits, the acquisition reflects a multiple of 8.3 times the estimated last 12 months of adjusted EBITDA. The acquisition is projected to be accretive to earnings in 2022, the first full year of combined operations.
The transaction is expected to close during the first quarter of 2021, subject to customary closing conditions and regulatory approval.