7-Eleven’s acquisition of Speedway in 2020 was a billion-dollar deal that sent shockwaves through the retail industry. The deal marked a significant shift in the convenience store market, as two of the largest players in the industry merged to create a retail powerhouse. But why did 7-Eleven buy Speedway, and what led up to this historic acquisition?
The untold story of this billion-dollar deal is a complex one, involving private equity firms, a global pandemic, and a fierce battle for control of the convenience store market. In this article, we’ll take a deep dive into the story behind 7-Eleven’s acquisition of Speedway and explore the implications of this game-changing deal.
From the beginning of the acquisition battle to the future of convenience stores after the merger, we’ll uncover the secrets and insights from industry experts on this monumental deal. So buckle up and get ready to discover the untold story of Why 7-Eleven Acquired Speedway.
Read on to find out the reasons behind this groundbreaking acquisition and how it could shape the future of the convenience store industry.
The Beginning of the Acquisition Battle
It all began when Seven & i Holdings, the parent company of 7-Eleven, made a bold move to acquire Speedway, the convenience store chain owned by Marathon Petroleum. The deal, which was worth a whopping $21 billion, caught the attention of the entire industry and sent shockwaves across the market.
The acquisition was not without its hurdles, however. A few months before the announcement, a hedge fund called Elliott Management had acquired a stake in Marathon Petroleum and was pushing for the company to split up and sell its retail assets, including Speedway. This move by Elliott Management set off a chain of events that would ultimately lead to the acquisition battle between 7-Eleven and other major players in the industry.
The Role of Couche-Tard
One of the major players in the acquisition battle was Alimentation Couche-Tard, the Canadian company that owns Circle K. Couche-Tard had been eyeing Speedway for a while and had even made an offer to acquire the chain for $20 billion. However, the deal fell through, and Seven & i Holdings swooped in with a higher bid.
Couche-Tard was not willing to give up that easily, though. The company continued to pursue Speedway and even partnered with Fire & Fuel, a private equity firm, to make another offer for the chain. However, Seven & i Holdings had already sealed the deal with Marathon Petroleum, and Couche-Tard was left empty-handed.
The Impact on the Convenience Store Industry
The acquisition of Speedway by 7-Eleven has had a significant impact on the convenience store industry. With the acquisition, 7-Eleven has become the largest convenience store chain in the United States, with over 14,000 stores. The move has also given the company a stronger foothold in the Midwest, where Speedway has a strong presence.
The acquisition has also sparked a wave of consolidation in the industry, with other major players looking to make similar moves. For example, Casey’s General Stores, another major convenience store chain, recently announced its acquisition of Bucky’s Convenience Stores, a chain with over 60 stores in the Midwest.
As the convenience store industry continues to evolve, it is clear that acquisitions and consolidation will be a key trend to watch in the coming years.
The Role of Private Equity Firms in the Deal
Private equity firms played a significant role in the acquisition of Speedway by 7-Eleven. These firms are known for investing in companies and then selling them for a profit. In this case, the private equity firm that owned Speedway, Marathon Petroleum, was looking to divest its retail operations to focus on its core business of refining and distribution.
The private equity firms that were involved in the deal include Blackstone Group, Apollo Global Management, and TDR Capital. They provided financing to 7-Eleven to make the acquisition possible.
The Involvement of Blackstone Group
Blackstone Group is one of the largest private equity firms in the world, and it played a crucial role in the acquisition of Speedway by 7-Eleven. Blackstone provided financing to 7-Eleven, and its experience in retail investments helped 7-Eleven to structure the deal in a way that was beneficial for both parties.
The Involvement of Apollo Global Management
Apollo Global Management is another private equity firm that provided financing to 7-Eleven for the acquisition of Speedway. Apollo has a strong track record of investing in retail companies and has experience in the convenience store industry. Its involvement in the deal helped to provide additional expertise and resources to 7-Eleven.
The Involvement of TDR Capital
TDR Capital is a private equity firm based in London that specializes in investing in European businesses. Its involvement in the acquisition of Speedway by 7-Eleven helped to provide additional financing and resources to make the deal possible.
In summary, the involvement of private equity firms played a critical role in the acquisition of Speedway by 7-Eleven. These firms provided financing, expertise, and resources that helped to make the deal possible. Without their involvement, it is unlikely that the acquisition would have been completed.
Keep reading to learn more about the impact of the acquisition on the convenience store industry.
How the Pandemic Impacted the Acquisition
The COVID-19 pandemic has caused unprecedented disruptions to businesses worldwide, and the acquisition was no exception. The pandemic had a significant impact on various aspects of the deal, from due diligence to closing.
One of the most significant impacts of the pandemic on the acquisition was the delay it caused. The due diligence process took longer than expected, as the company had to provide additional documentation and information to the buyer. Additionally, travel restrictions and social distancing measures made it challenging to conduct on-site visits and meetings, leading to further delays.
Remote Work Challenges
One of the biggest challenges that arose from the pandemic was the shift to remote work. With employees working from home, it became more difficult to assess the company’s operations, culture, and overall productivity. It was also challenging to ensure that all employees had access to the necessary technology and tools to continue working remotely.
Financial Impacts
The pandemic also had a significant impact on the target company’s financials. As a result of the pandemic, the company experienced a drop in revenue and cash flow, leading to reduced profitability. This had a direct impact on the deal valuation and the buyer’s willingness to pay the initial price agreed upon. The buyer had to reevaluate the target company’s financials to ensure that it was still a viable acquisition.
Changes in Deal Terms
The pandemic also led to changes in deal terms. In some cases, the buyer and seller agreed to modify the terms of the deal to account for the impact of the pandemic. This included changes to the purchase price, payment terms, and earn-out provisions.
- Payment Terms – The buyer may have agreed to extend the payment terms to provide the seller with more financial flexibility in light of the pandemic.
- Purchase Price – The buyer may have renegotiated the purchase price to reflect the target company’s reduced financial performance.
In conclusion, the COVID-19 pandemic had a significant impact on the acquisition, causing delays, financial impacts, and changes in deal terms. It highlighted the importance of having a flexible and adaptable approach to deal-making in uncertain times.
The Significance of Speedway’s Convenience Store Portfolio
Speedway, a subsidiary of Marathon Petroleum, operates a convenience store portfolio that has played a significant role in its acquisition by 7-Eleven. The convenience store chain’s portfolio includes over 3,800 stores in 36 states in the US, making it one of the largest convenience store chains in the country.
The portfolio includes a variety of store formats, including traditional convenience stores, truck stops, and gas stations. This diverse mix of store formats has helped Speedway to become a leader in the convenience store industry, providing customers with a one-stop-shop for fuel, snacks, and other daily essentials.
Strong Market Position
- Speedway’s convenience store portfolio has given it a strong market position, enabling the company to compete effectively with other major players in the industry.
- The convenience store chain’s extensive footprint across the US has helped it to build a loyal customer base, while its diverse store formats have allowed it to cater to the needs of a broad range of customers.
Attractive Investment Opportunity
The significance of Speedway’s convenience store portfolio extends beyond its role in the acquisition by 7-Eleven. The portfolio is also an attractive investment opportunity for private equity firms and other investors in the retail sector. The strong market position of the convenience store chain and its diverse store formats make it an attractive asset for investors looking for stable, long-term returns.
Potential for Growth
- Speedway’s convenience store portfolio also offers significant potential for growth. The convenience store industry is expected to continue to grow in the coming years, driven by changing consumer habits and increased demand for convenience.
- Speedway’s diverse mix of store formats and strong market position make it well-positioned to capitalize on this growth, with opportunities to expand its footprint in existing markets and enter new ones.
Overall, the significance of Speedway’s convenience store portfolio lies in its strong market position, diverse store formats, and potential for growth. These factors have made it an attractive acquisition target for 7-Eleven and an attractive investment opportunity for private equity firms and other investors in the retail sector.
The Future of Convenience Stores After the Acquisition
The recent acquisition of Speedway’s convenience store portfolio by 7-Eleven has generated a buzz in the industry about the future of convenience stores. Here are some of the potential changes we can expect to see:
Firstly, with 7-Eleven now owning the largest convenience store chain in the US, we can expect to see increased competition from other convenience store chains trying to catch up. This could lead to a push for innovation and differentiation, as stores look to offer unique products and experiences to stand out from the crowd.
More Emphasis on Technology
- With the pandemic accelerating the adoption of contactless payments and other technologies, convenience stores may invest more in these areas to provide a safer and more efficient shopping experience for customers.
- Mobile apps and online ordering could also become more prevalent in convenience stores, allowing customers to pre-order products for pickup or delivery.
Focus on Health and Wellness
- With the pandemic highlighting the importance of health and wellness, convenience stores may place a greater emphasis on healthy food options, supplements, and other products aimed at promoting a healthy lifestyle.
- This could also lead to more partnerships between convenience stores and healthcare providers, with stores offering health screenings and other services.
Increased Sustainability Efforts
- As consumers become more environmentally conscious, convenience stores may prioritize sustainability efforts such as reducing plastic waste and offering more eco-friendly products.
- This could lead to more partnerships with sustainable suppliers and a greater focus on reducing the carbon footprint of convenience stores.
Overall, the acquisition of Speedway’s convenience store portfolio by 7-Eleven could lead to significant changes in the industry, with increased competition, technological innovation, and a greater focus on health and wellness and sustainability. Only time will tell what the future holds for convenience stores, but one thing is for sure – it’s an exciting time to be in the industry.
Insights from Industry Experts on the Deal
Speedway’s acquisition by Seven & i Holdings has caused ripples throughout the convenience store industry. Here are some insights from industry experts on the deal:
The acquisition will create a new leader in the US convenience store market
- According to RetailWire, the acquisition of Speedway will make Seven & i Holdings the largest convenience store operator in the US with over 14,000 stores.
- This move will also enable the company to compete more effectively with other retail giants like Walmart and Amazon.
The acquisition is a smart strategic move for Seven & i Holdings
- Industry experts have lauded Seven & i Holdings for the acquisition, with many calling it a smart strategic move.
- The move will allow Seven & i Holdings to expand its presence in the US market and take advantage of the growing demand for convenience stores.
The acquisition will lead to consolidation in the convenience store industry
- According to CSP Daily News, the acquisition of Speedway is just one example of the consolidation trend that is happening in the convenience store industry.
- This trend is driven by factors like increased competition, changing consumer preferences, and rising operating costs.
- The consolidation trend is expected to continue, with more acquisitions and mergers likely to occur in the future.
Frequently Asked Questions
What was the reason behind 7-11’s acquisition of Speedway?
7-11’s acquisition of Speedway was part of its strategy to expand its footprint in the United States. The acquisition helped 7-11 to increase its store count in North America by approximately 40%. Additionally, the acquisition allowed 7-11 to gain a strong presence in the Midwest and East Coast, where Speedway had a significant market share.Expansion
What was the value of the acquisition deal?
The acquisition deal between 7-11 and Speedway was valued at $21 billion. The deal included the acquisition of approximately 3,900 convenience stores located in 36 states in the United States.Value
Will the Speedway stores be rebranded as 7-11 stores?
Yes, the Speedway stores will be rebranded as 7-11 stores over the next three years. The rebranding process will begin in 2021 and is expected to be completed by 202The rebranded stores will continue to offer the same products and services that were available at Speedway stores.Rebranding
How will the acquisition impact the convenience store industry?
The acquisition is expected to lead to increased competition in the convenience store industry. With the acquisition of Speedway, 7-11 has become the largest convenience store operator in the United States. The increased competition is likely to result in improved products and services, lower prices, and better customer experiences for consumers.Competition
What will happen to the employees of Speedway?
The employees of Speedway will be retained by 7-11 following the acquisition. The acquisition is expected to create new job opportunities for employees as 7-11 plans to expand its operations in the United States.Employees
How will the acquisition impact 7-11’s financials?
The acquisition of Speedway is expected to have a positive impact on 7-11’s financials. The acquisition will help 7-11 to increase its revenue and earnings as it gains access to Speedway’s customer base and existing store network. Additionally, the acquisition is expected to result in cost savings for 7-11 as it benefits from economies of scale.Financials