Topper takes control of CrossAmerica Partners

Joe Topper is back at the helm of the Allentown company he founded, which is now called CrossAmerica Partners LP and employs about 100 people downtown.

Investment vehicles controlled by Topper on Tuesday bought the ownership interests in CrossAmerica from Alimentation Couche-Tard, the Canadian company that acquired CrossAmerica’s general partner in 2017. For an undisclosed amount, Topper’s investment funds acquired 100% of the interest in CrossAmerica’s general partner, all of CrossAmerica’s incentive distribution rights along with about 7.5 million of its limited partner units.

Topper, a board director of CrossAmerica’s general partner since 2012, now becomes chairman of the board of directors.

“At this time, we anticipate maintaining our current distribution policy, distribution coverage and leverage ratio targets that have been outlined over the past few quarters,” Topper said in a news release issued Wednesday. “I am excited for the future of the Partnership. In the coming weeks and months, I and the management team look forward to sharing in more detail with our unitholders our strategy and goals for CrossAmerica.”

Topper was not available Wednesday for an interview.

CrossAmerica is a wholesale fuels distributor and operator of convenience stores across the country. As of late, CrossAmerica has been focused on its wholesale operation, announcing deals with convenience store retailers to operate its retail sites. For example, in a deal that closed Oct. 1, Applegreen plc became the operator of 46 of CrossAmerica’s retail sites in the Midwest, with CrossAmerica entering into a master fuel supply contract with the convenience store operator.

The company’s wholesale segment, in which CrossAmerica is one of the 10 largest independent distributors of motor fuel by volume in the United States for ExxonMobil, BP and Shell, generated revenue last year of $2.2 billion. In its third quarter, CrossAmerica this month reported gross profit in the segment of $36.2 million, up from $33.8 million a year earlier.

In the company’s retail segment, in which it owns or leases and operates retail sites, CrossAmerica reported 2018 revenue of $652 million. The company reported third-quarter gross profit in the segment of $4.9 million, down from $10 million last year as CrossAmerica divested some sites and converted others into lessee dealers.

In connection with the deal, CrossAmerica and Couche-Tard agreed on an asset exchange between the two parties. In the agreement, Couche-Tard will transfer U.S. wholesale fuel supply contracts covering 387 sites and 45 fee and leasehold properties to CrossAmerica, while CrossAmerica will transfer its 17.5% interest in CST Fuel Supply LP to Couche-Tard. That exchange transaction is expected to close in the first quarter.

“I am honored to once again lead CrossAmerica and to work with this exceptional team,” Topper said in a news release from Couche-Tard. “The announcement of this most recent exchange of assets with CoucheTard shows the tremendous growth opportunities for CrossAmerica and our ability to continue to increase value for our unitholders.”

Units of CrossAmerica, a limited partnership, closed at $17.51 Wednesday, up 13 cents from Tuesday and in the ballpark of where the price has been for much of this year.

According to CrossAmerica’s annual report, Topper in 1987 bought his family’s retail fuel business on MacArthur Road in

Whitehall Township, and five years later started the company that would eventually become Lehigh Gas Corp. It was privately held until fall 2012, when the company announced it was going public, creating the entity Lehigh Gas Partners LP that issued partnership units to investors on the New York Stock Exchange.

It didn’t waste much time tapping into its new liquidity, snapping up 69 gas station properties in Florida and the Scranton-Wilkes-Barre area in December 2012. The company continued to grow and, in fall 2014, Texas-based CST Brands completed its purchase of the general partner of Lehigh Gas Partners, changing the company’s name to CrossAmerica Partners.

Topper remained president and CEO of the company’s general partner until he resigned in 2015, though he stayed on as a board director. Topper also remained involved in downtown Allentown’s rebirth, previously describing himself as a “silent partner” in City Center Investment Corp., which he cofounded in 2011 with developer J.B. Reilly.

Reilly, also a CrossAmerica board director, and Topper have counted CrossAmerica as one of City Center’s tenants for many years.

The company was among the first to move into Two City Center at Seventh and Hamilton streets, later relocating to Three City Center between Fifth and Sixth streets. CrossAmerica in 2018 moved into the 12-story Tower 6, at Sixth and Hamilton streets, to make room for Lehigh Valley Health Network workers relocating from Salisbury Township into Three City Center.

As of 2018, CrossAmerica employed 2,000 people across the country.

Morning Call reporter Jon Harris can be reached at 610-820-6779 or at jon.harris@mcall.com.