SAN ANTONIO and ALLENTOWN, Pa. -- CST Brands Inc. will purchase 100 percent of the membership interests of Lehigh Gas GP LLC, the general partner of Lehigh Gas Partners LP. CST will pay approximately $85 million in the transaction, which includes $17 million in cash and 2.044 million shares of CST common stock.
The deal is expected to close in the fourth quarter.
Joe Topper, chairman and CEO of Lehigh Gas Partners, will continue as the company's president and CEO. Lehigh Gas Partners will continue to trade as a separate, publicly traded, master limited partnership (MLP) and maintain its current headquarters in Allentown, Pa.
In a joint news release, both companies said the deal will provide many strategic benefits. These include providing CST Brands with access to capital through a growth-oriented MLP vehicle to execute its long-term strategic plan; drop-down asset sales to Lehigh Gas Partners and an expanded set of external opportunities to drive cash flow growth for CST Brands; and Lehigh Gas Partners gaining access to a pipeline of drop-down asset acquisitions from CST Brands to fuel future distribution increases.
"The transaction provides both the shareholders of CST Brands and the unitholders of Lehigh Gas Partners with the benefit of strategic growth options for the future and a symbiotic relationship for stronger growth together," said Kim Bowers, chairman and CEO of San Antonio-based CST Brands. "We expect that the transaction will provide us with opportunistic access to the MLP capital markets, the opportunity to grow our U.S. wholesale business and to expand our new store build program, as well as provide us strategic flexibility in the consolidating fuel and convenience retail industry."
Topper added that the transaction will create a "tremendous platform for future growth for both CST Brands and Lehigh Gas Partners, while enhancing both companies' goal of increasing shareholder value and unitholder value."
CST Brands Inc. is the operator of more than 1,000 Corner Store locations in the United States.
Lehigh Gas Partners LP distributes fuel to more than 1,050 locations and owns or leases more than 625 convenience stores and gas stations in 16 states.