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07/25/2022

ARKO Finalizes Acquisition of Quarles Petroleum Assets

The deal is part of the company's focus on strategic growth that generates long-term shareholder value.
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Arko Family of Community Brands logo and GPM logo

RICHMOND, Va. — Just five months after announcing it would acquire the fueling cardlock and fuel distribution business of Quarles Petroleum Inc., ARKO Corp. subsidiary GPM Investments LLC closed the deal. 

As part of the transaction, GPM acquired 121 proprietary Quarles-branded cardlock sites, management of 63 third party cardlock sites for fleet fueling operations, 46 independent dealer locations, including certain lessee-dealer sites, and a small transportation fleet.

"We plan to continue to pursue acquisitions like the Quarles acquisition as we focus on strategic growth that generates long-term shareholder value," said ARKO President and CEO Arie Kotler. "The acquired Quarles assets comprise a complementary business that has operated continuously for more than 80 years, and we believe we can grow and expand the company's fleet fueling platform and continue to provide best-in-class fuel services and solutions to our customers.

"In addition, nearly 100 Quarles employees will be retained and become employees of GPM. They are accomplished operators, and we welcome them into our Family of Community Brands," he added.

The deal includes proprietary cardlock locations that fulfill the fuel needs of multiple industries at easily accessible unmanned fuel sites in prime locations in Virginia, North Carolina, Maryland, Pennsylvania and the District of Columbia; management of third-party fueling sites; and the marketing of fuel cards that give customers access to a nationwide network of fueling sites.

ARKO expects the acquisition to add approximately 160 million gallons, primarily diesel, to the approximately 2 billion gallons the company currently sells annually, as well as fleet fueling card operations that are expected to facilitate the sale of approximately 50 million gallons at third-party locations nationwide.

Using estimated forward-looking non-GAAP measures, ARKO expects that the acquisition of Quarles Petroleum will add approximately $17.5 million of adjusted EBITDA on an annualized basis after incremental rent of approximately $7.8 million to be paid to Oak Street Real Estate Capital, a division of Blue Owl Capital, the private equity real estate firm that funded approximately $130 million of the aggregate purchase price.

The deal for Quarles Petroleum is part of ARKO's strategic focus on growth and generating long-term value through its dual convenience and wholesale platform. The transaction is the company's 21st acquisition since 2013.

As Convenience Store News previously reported, Quarles Petroleum recently sold its propane and refined products distribution business to Superior Plus Energy Services Inc., a subsidiary of Superior Plus Corp.

Founded in 1940, Fredericksburg, Va.-based Quarles Petroleum entered the propane business and began opening cardlock fueling locations and convenience stores in the 1980s. Over the next 20 years, it opened a total of 31 Q-Stop convenience stores before selling them to 7-Eleven Inc. in 2010 to focus on its delivered fuels and fleet fueling businesses.

Over the past 10 years, and under the leadership of its current management, Quarles has grown through the continued development of its cardlock network and fleet fueling program, as well as several acquisitions of propane and refined products distribution companies, including Whiting Oil Co., Northern Neck Oil Co., Northern Neck Gas, Revere Gas Co., the propane assets of PAPCO Inc. and Dixie Gas & Oil.

Based in Richmond, GPM operates or supplies stores in 33 states and Washington, D.C. As the sixth largest c-store chain in the country, GPM has more than 3,000 locations comprising approximately 1,400 company-operated stores and 1,600 dealer sites to which it supplies fuel.