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WESTLAKE, Ohio -- After a conference call with investors yesterday, the picture became clearer concerning the completed acquisition of all Petro Stopping Centers locations by Travel Centers of America (TA) and Hospitality Properties Trust (HPT), a real estate investment trust, when one player in the deal explained the reasons for the acquisition.
"The combination is a very exciting step for both companies," said Thomas M. O'Brien, chief executive officer and president for TA. "TA is able to expand its offering to fleet and owner/operators alike. Continued operations of the two brands offer high quality to fleets and owner/operators across the nation."
He continued: "By expanding a nationwide system, it increases our purchasing power, and can remain competitive in the marketplace where larger competitors have diversified."
With the two companies operating together, it will allow synergies that will bring operating costs down, more so than if both companies were operating on their own, O'Brien said.
In addition, Petro Stopping brought with it a "pipeline of development," which includes four parcels of land with more than 50 acres each to develop growth, he said.
Also, the purchase will allow TA to continue its franchise business. The franchised Petro Stopping locations have an average of 6.5 years left on the agreements. "Franchising is, and will remain, an important part of both the TA and Petro brands," O'Brien said.
Further, the company believes it accomplished the purchase "with compelling economics," with the expectations of full operations of recently opened sites and other synergies to total $14 billion.
As previously reported in a CSNews Online news flash yesterday, Petro Stoppings' real estate assets were purchased by HPT for $630 million plus closing and other costs estimated at $25 million; and in a separate transaction, simultaneously leased the locations -- which included inventory, working capital and some personal property -- to TA for an initial $62.2 million in net rent per year. The lease includes all 40 Petro Stopping locations, and runs through June 2024, with an option to renew for all locations.
TA will take over Petro Stopping's operations, including its franchised locations. As a result, TA and Petro Stopping locations will increase to more than 230 locations in 41 U.S. states. The transaction will cause no interruption in operations and all existing service and loyalty program contracts will remain in place, Petro Stopping said in a statement.
The combined company will be run by the existing TA management, and all of Petro Stopping's field operations and related staff -- which make up 97 percent of the company's 5,500 employees -- are expected to remain with the new company. During a transition period that will last several months, some operations will remain at Petro Stopping's El Paso, Texas, headquarters, according to the company.
"We are very pleased to announce this latest step in the evolution of Petro Stopping Centers," James A. Cardwell Sr., founder of Petro Stopping, said in a written statement. "As part of a larger and stronger company, Petro may provide new opportunities for franchise owners and greater opportunities for career growth for the vast majority of Petro employees."
The 40 locations purchased by HPT are similar to the locations the company bought earlier this year, but generally newer and larger. All are situated close to U.S. highways.
The states where Petro Stopping Centers are located include:
-- Alabama (1)
-- Nevada (2)
-- Arkansas (2)
-- New Jersey (1)
-- Arizona (2)
-- New Mexico (1)
-- California (1)
-- New York (1)
-- Florida (1)
-- North Carolina (1)
-- Georgia (2)
-- Ohio (4)
-- Indiana (1)
-- Oklahoma (1)
-- Illinois (1)
-- Oregon (1)
-- Kentucky (1)
-- Pennsylvania (1)
-- Louisiana (3)
-- Tennessee (2)
-- Missouri (1)
-- Texas (6)
-- Nebraska (1)
-- Washington (1)
-- Wyoming (1)
The average land acreage for the locations is 26 acres per center, totaling 1,036 acres. There are 38 full-service restaurants with an average of 196 seats per location. Truck parking spaces average 256 spaces per center, while car parking spaces average 142 spaces. Locations have an average of 12 diesel dispensers and 5 gasoline dispensers. In addition, there are 16 quick-serve restaurants in 13 properties, under national brands such as Pizza Hut and Subway.
In conjunction with the acquisition, Volvo Trucks North America, which held 28.68 percent of the Petro Stopping U.S. truck stop chain, divested its entire holdings in the company to both HPT and TA.
As a result, Volvo Trucks will gain $46.3 million from the purchase, which will affect its second quarter operating income in parent company Volvo Group's truck segment.
Volvo Trucks North America purchased its stake in Petro Stopping in 1999 to strengthen its network of parts and service points in North America. Since then, investments were made in its distribution network and as a result, ownership in Petro Stopping now has less strategic importance, according to the company.