UPDATE: March 28, 2023: In a press release issued Tuesday, TravelCenters of America (TA) upheld its rejection of Arko’s competing bid for the company following its decision to sell to oil major BP. Arko’s bid of $92 per share is “neither superior to the transaction TA previously agreed to” with BP, “nor is it likely to lead to a superior proposal,” TA noted.

TA’s board determined, the release notes, that Arko’s bid carried “significant” financing risk given the company’s “lack of committed financing and sub-investment grade credit rating.”

Dive Brief:

• Arko, the parent company for c-store giant GPM Investments, has issued a letter urging TravelCenters of America to “seriously consider” its proposal to acquire the travel center chain instead of selling to oil major BP, which agreed to purchase the company in February, according to a Monday announcement.
• The Richmond, Virginia-based retailer has offered to acquire TA for $92 per share, which trumps BP’s offer of $86 per share, or $1.3 billion. Arko said it’s prepared “immediately” to conduct due diligence and “quickly enter into an agreement” to merge with TA, according to the announcement.
• This comes about two weeks after TA said in a financial report that it received the rival bid of $92 per share from “a publicly traded fuel supplier and convenience store operator” known as “Party G,” but rejected the proposal due to the company’s credit rating and financial conditions, among other reasons.

Dive Insight:

TA publicly stated in February that there were “competitive rounds of bidding” from multiple buyers before it agreed to sell its assets to BP. The deal — which included TA’s 281 locations across 44 states — was unanimously approved by TA’s board, and the companies said they expected the acquisition to close by mid-year 2023.

After receiving the rival bid from “Party G” on March 14, TA’s board and management met eight days later to discuss its terms and conditions before shutting the proposal down. It now appears “Party G” was Arko — which believes TA’s decision to reject its offer was “incorrect and not in the best interest” of TA’s stockholders, according to Monday’s announcement.

On March 22, TA determined that Arko’s bid, although higher than BP’s, didn’t “constitute a superior proposal and could not reasonably be expected to lead to a superior proposal,” according to the financial report.

TA noted numerous reasons for rejecting Arko’s offer, including the fact that Arko would require significant third-party financing to complete the deal, and it did not have a firm commitment from any financing source to acquire the money; that Arko would have needed about 30 days to complete diligence and enter into definitive agreements, pushing back the sale; and that Arko would have needed to obtain more closing conditions than what BP required, which would cause even more delays.

However, it appears Arko has changed its proposal, now saying it would enter on “the same material terms” as BP intends to, according to Monday’s announcement. Arko also emphasized that its proposal would net TA shareholders nearly $100 million more than BP’s proposal.

“As 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 has never required any financing conditions and has closed every acquisition it has put under contract,” the company said in the announcement. “Arko’s proposal to TravelCenters offers no financing-related conditions.”

Arko did not respond by press time to an inquiry from C-Store Dive for more details on its bid to acquire TravelCenters of America.