Sunoco to sell 1,110 US stores to 7Eleven operator for US$3.3 billion
Sunoco LP says it will sell 1,110 convenience stores to Japan’s Seven & i Holdings Co for US$3.3 billion as the Texasbased company shifts its focus to its fuel supply business.
As part of the deal, the US company will also supply about 2.2 billion gallons of fuel annually for 15 years to a unit of the operator of 7-Eleven chain of convenience stores.
Sunoco, a publicly- traded partnership controlled by pipeline operator Energy Transfer Equity, operates about 1,350 retail fuelling sites and convenience stores under brands such as APlus and Stripes, the company’s website showed.
The company said it planned to sell another 200 stores by the end of the fourth quarter and expand its distribution business, partly through acquisitions.
Energy Transfer’s chief financial officer, Thomas Long, said there are no plans to dissolve the partnership.
Energy Transfer wants Sunoco to remain a standalone business and continue on the M&A front to expand its business, Long said. “That is very much the directive.”
Sunoco said it expected to use the proceeds from the sale primarily to repay debt, which was about US$4.51 billion as of December.
Seven & i Holdings has been aggressively expanding in Japan and the US, where it has been acquiring stores from local retailers.
Its latest purchase comes as operators of traditional big-box retailers, including Seven & i, have been suffering weak sales as changing tastes and modest wage growth prompt shoppers to defect to cheaper speciality chains and online outlets.
“The US convenience store market has growth momentum. We see opportunities there,” Seven & i President Ryuichi Isaka said.
Seven & i runs general merchandise, department and speciality stores, but the bulk of its operating profit comes from convenience stores.
The deal would be the biggest by the Japanese company’s US unit 7-Eleven Inc.
Seven & i has about 19,400 7- Eleven stores in Japan and 8,700 in the United States and Canada, including those run by franchisees.
7- Eleven Inc, known for its “Slurpee” frozen beverage, has said it aims to increase its number of stores to 10,000 over the three years through 2019. — Reuters