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By Barbara Grondin Francella
FRANKLIN, Tenn. -- Delek US Holdings Inc., based here, has agreed to buy 107 Favorite Markets from Calfee Co. of Dalton Inc. for about $65 million.
Delek's MAPCO Express Inc. subsidiary will operate the stores. The company expects to close the deal within the second quarter of this year.
The Favorite Markets -- 71 owned and 36 leased -- are located primarily in eastern Tennessee and northern Georgia. The majority of the stores are branded, and fuel is being sold at 104 locations under the Conoco, Shell and Marathon flags.
With this acquisition, Delek will operate more than 500 stores in the United States. Delek President and CEO Uzi Yemin told Convenience Store News the stores will be immediately re-merchandised similarly to MAPCO's other stores, including its private label and Grille Marx foodservice programs. They will eventually be renamed MAPCO, as all the stores Delek acquires will be.
"We'll keep filling in our markets, and feel good about the strategy," Yemin said, noting that the price paid for the stores was a very good one.
MAPCO Express operates 394 company stores in Alabama, Arkansas, Georgia, Kentucky, Louisiana, Mississippi, Tennessee and Virginia, with approximately 93 percent of the stores concentrated in Tennessee, Alabama and Virginia. The stores fly the MAPCO Express, MAPCO Mart, East Coast, FAST food and fuel and Discount Food Mart banners.
"With this agreement, we further strengthen our position in our core markets, building on our recent acquisition of 43 convenience stores in southeast Tennessee and northwest Georgia from Fast Petroleum," Yemin said. "These transactions are representative of the opportunities that exist, allowing us to continue expanding our retail business within the highly-fragmented markets in which we operate."
Delek will finance the purchase, including the real estate associated with the 71 company-owned locations, with a combination of available cash from its initial public offering completed in May 2006 and additional borrowings.
The acquisition does not include all of Calfee Co. of Dalton's stores. According to the chain's website, it operates 129 c-stores in Georgia, Tennessee and Alabama under the Favorite Markets and Compac Food Stores names. Sam Turner, Calfee Co. of Dalton's chairman and CEO, was not available for comment as of press time. However, Delek's Yemin said Calfee Co. was not interested in selling its stores near Mobile, Ala.
The history of Calfee Co. of Dalton dates back to the start of the c-store industry. In 1981, investors, including members of the Turner family, purchased 65 convenience stores from George Calfee. These stores were operated by the Calfee family under the name of "Calfee's Minit-Markets" and were prominent fixtures in Chattanooga, Tenn., and North Georgia communities. Some of these stores reflected the original concept of convenience stores, when small markets began selling self-serve gasoline in the 1960s.
Now, Favorite Markets' product offerings include pay-at-the-pump gasoline, a wide range of convenience products, and, at many stores, foodservice.
Delek's refining segment operates a refinery with a design crude distillation capacity of 60,000 barrels per day, in Tyler, Texas. The marketing and supply segment markets refined products through its terminals in Abilene and San Angelo, Texas, as well as other third-party terminals.