ENON’S SPEEDWAY WON’T SPIN OFF CONVENIENCE STORES

Parent firm won’t spin off convenience chain as a separate business.

Marathon’s board’s has decided to keep the Enon-based Speedway convenience store chain and not spin it off as a separate business, a move experts said is likely driven by the success of convenience stores.

Marathon, based in Findlay, had been reviewing a proposal that would have spun off the Speedway chain as a separate entity after a recommendation from one of the company’s largest shareholders. Speedway’s corporate headquarters is based in Enon, and the company has about 1,350 workers locally and about 33,820 nationally.

Instead the parent company’s board announced this week the convenience store chain is more valuable to shareholders if it remains under Marathon’s umbrella.

“Following a rigorous review led by an independent committee of the board, the board has unanimously concluded that shareholder value is best optimized with Speedway remaining part of our integrated business,” said Gary Heminger, Marathon’s president and CEO in a press release announcing the decision. “We thank the independent committee for its efforts in performing a comprehensive review of options to ensure we are best positioned to deliver the greatest possible longterm value for our shareholders.”

In-store sales at convenience stores has gone up in the past couple of years, said Jeff Lenard, who’s an analyst and vice president of Strategic Industry Initiatives. The company works to help investors pick the best companies to invest in.

Convenience store sales reached $233 billion in the industry nationwide in 2016, which resulted in more than $10 billion pre-tax profits, he said.

“Anyone that competes against the internet is having trouble,” Lenard said. “If you can wait a day or two for the product then that business model is endangered. However, the convenience store model is about right now. You are hungry now, you need this product or that product now.”

In 2014, Speedway completed a $2.8 billion acquisition of Hess Retail Holdings, an East Coast convenience store chain. Speedway already operated about 1,500 stores across the U.S., mostly in Midwestern states like Ohio, Indiana and Michigan.

The Hess acquisition can benefit Speedway into the future, Lenard said. There’s value in having convenient stores even in the internet age. “People in the industry see the value in brick and mortar stores,” he said. “Having a substantial brick and mortar network of stores can be a real plus.”

He said location also plays a big role in convenience stores’ success. Stores that are able to attract thousands of customers a week — as many Speedway stores do throughout the country — are likely to succeed, he said.