7-Eleven to Take Over Stripes Convenience Stores
DALLAS and SAN ANGELO, TX — In a $3.3 Billion deal, 7-Eleven, Inc. is buying 1,110 convenience stores, including all of the Stripes Convenience Stores in west Texas along with the Laredo Taco brand.
According to Reuters, 7-Eleven is purchasing all of Texas-based Sunoco LP’s convenience stores in a quest to grow to 10,000 stores nationwide.
Sunoco will supply the newly acquired stores with gasoline for resale for 15 years as part of the deal.
The Stripes stores are part of the former Town & Country Convenience Store chain with San Angelo roots.
T&C traces its history back to an earlier chain of the same name, founded in 1959 in Austin by Paul Chintamani.
During the early 1960s the predecessor chain found itself in financial trouble due to over-expansion.
In 1959, H.A. "Harold" Gibbs of San Angelo and F.L. "Steve" Stephens, a district manager for the San Angelo area, purchased Town & Country's six San Angelo stores and one store in Del Rio.
The partners expanded the franchise to over 250 locations across west Texas under the Town & Country name.
In 2007, the partners of T&C sold the entire chain to Susser Holdings of Corpus Christi for $361 million who rebranded the stores Stripes. The stores were subsequently sold in another merger with Energy Transfer Partners (Sunoco brand) in 2014.
The operator of the 7-Eleven chain of convenience stores has been aggressively opening stores in Japan as well as the United States, where it has been acquiring stores from local retailers.
Its latest purchase comes as operators of traditional big-box retailers including 7-Eleven have been suffering weak sales as changing tastes and modest wage growth have prompted shoppers to defect to cheaper speciality chains and online outlets.
"The U.S. convenience store market has growth momentum. We see opportunities there," 7-Eleven President Ryuichi Isaka said at an earnings briefing after announcing the Sunoco deal.
7-Eleven runs general merchandise, department and speciality stores, but the bulk of its operating profit comes from convenience stores - or 86 percent of 364.6 billion yen ($3.29 billion) in the year through February.
In a statement, the firm said U.S. unit 7-Eleven Inc [SILC.UL] has agreed to buy 1,108 Sunoco convenience stores and petrol stations in Texas and other states in August.
Sunoco currently operates about 1,350 retail fuelling sites and convenience stores under brands such as APlus and Stripes, the firm's website showed.
Sunoco expects to use the proceeds primarily to repay debt, and the rest for general partnership purposes.
The deal with 7-Eleven is the first step in Sunoco's strategic move away from company-operated convenience stores to focus on its fuel supply business.
"We view Sunoco's divestiture of assets and agreement with 7-Eleven positively as the transaction should alleviate (its) currently high leverage position and provide significantly higher cash flow visibility," RBC Capital Markets analyst Elvira Scotto said in a client note.
The deal would be the biggest by 7-Eleven Inc, known for its "Slurpee" frozen beverage. Most recently, 7-Eleven Inc acquired 79 stores in California and Wyoming from CST Brands Inc in July.
7-Eleven i has about 19,400 7-Eleven stores in Japan and 8,700 in the United States and Canada, including those run by franchisees. 7-Eleven Inc has said it aims to increase its number of stores to 10,000 over the three years through 2019.
In Japan, same-store sales in the year through February rose 1.8 percent at the 7-Eleven chain, but fell 4.2 percent at 7-Eleven i's Ito-Yokado general merchandise stores.
A Japanese company which is now part of 7-Eleven opened a 7-Eleven store as a regional licensee in 1974. The then-new retail concept became so successful in Japan that the company later bought out the U.S. owner of the convenience store chain.
The deal is expected to close by the fourth quarter 2017.
(Joe Hyde on the San Angelo connection. Also reporting by Taiga Uranaka; Additional reporting by Ritsuko Shimizu and Chris Gallagher and Vishaka George; Editing by Amrutha Gayathri, Christopher Cushing and Martina D'Couto)
Update April 7 at 11:30 a.m. - In a clarification this morning, a Sunoco spokeswoman said this deal doesn't include the Stripes Convenience Stores locations in west Texas and southwestern Oklahoma. More on this here.
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