Shares of TravelCenters of America Inc. rocketed 71% Thursday after BP swooped in to take over the company for $86 a share in cash, or about $1.3 billion.
said the deal is a play on several of its transition growth engines, namely convenience, electric-vehicle charging, biofuels/renewable natural gas and hydrogen.
founded in 1972 and based in Westlake, Ohio, has a network of 281 locations in 44 states under the TA, Petro Stopping Centers and TA Express brands. It offers fuel, truck maintenance and repair, restaurants, travel stores, car and truck parking and other services.
The price is equal to an 84% premium over the average trading price of the stock in the 30 days ending Feb. 15.
The deal is expected to close by mid-2023, and two of the company’s main shareholders — RMR Group Inc.
with a 4.1% stake, and Service Properties Trust
with 7.8% — have agreed to vote their shares in favor of it.
“Following the implementation of TA’s turnaround plan and several quarters of improved operating performance, TA received unsolicited interest to acquire the company,” TravelCenters said in a statement.
It then hired financial and legal advisers to review a potential sale of the company that culminated in today’s announcement, it added.
BP, meanwhile, said it expects the deal to add to Ebitda immediately, referring to earnings before interest, taxes, depreciation and amortization, which is expected to grow to around $800 million by 2025, underpinned by investment, integration value and synergies.
It’s further expected to deliver over 15% returns and be accretive to free cash flow per share from 2024 and to almost double BP’s global convenience gross margin.
“This deal will grow our convenience and mobility footprint across the U.S. and grow earnings with attractive returns,” said BP Chief Executive Bernard Looney in a statement.
Roughly 70% of TravelCenters’ gross margin is generated by its convenience stores, which is almost double that of BP.
The deal comes a day after BP said it plans to invest $1 billion in EV charging across the U.S. by 2030. As part of that plan, it is working with car-rental company Hertz to bring fast-charging infrastructure to Hertz locations in major cities, including Atlanta, Austin, Boston, Chicago, Denver, Houston, Miami, New York City, Orlando, Phoenix, San Francisco and Washington, D.C.
Cowen analysts said the deal “complement’s BP’s U.S. off-highway and provides a stronger footprint’ for its growth engines.
“Recall BP has a target of growing convenience and mobility from $4.3 billion in 2022 to $7 billion in 2025. This transaction could suggest that M&A is an important driver of that growth,” said analysts Jason Gabelman and Brandon Bingham.
Cowen has a market perform rating on BP stock.