National truckstop chain TravelCenters of America (TA) is buying out rival Petro Stopping Centers for a reported $700 million. The move will add Petro’s 69 locations and 5,500 employees in 33 states to TA’s 163 sites and 11,000 employees in 40 states-- creating a combined network of over 230 locations in 41 states.
“The Petro and the TA brands will be operated separately after the transaction closes, and we expect to seek to expand both brands through acquisitions, development and franchising,” said Thomas O’Brien, TA president & CEO. “Each of the TA and Petro operations excels at certain aspects of the travel center business and I expect the combined company will benefit by utilizing the best practices of each company.”
James “Jack” Cardwell, Sr. – who founded Petro back in 1975 and whose family represents the majority stakeholders – noted that the combined company will be operated by TA’s management team out of Westlake, OH.
Though all Petro field operations and related staff – approximately 97% of Petro’s 5,500 employees – are expected to remain with the combined company, what operational control remains at Petro’s El Paso, TX headquarters will be determined during a transition period that’s expected to last several months, he stressed.
“As part of a larger and stronger company, Petro may provide new opportunities for franchise owners and greater opportunities for career growth for the vast majority of our employees,” Cardwell said.
The buyout itself is complex. Hospitality Properties Trust (HPT) acquired TA last September for $1.9 billion, It then spun TA off as a separate, publicly traded company in January – with TA leasing 146 of its truckstops from HPT while directly owning and operating just two of its locations. A further 13 sites are owned by TA franchisees, with three more owned by third parties other than HPT yet operated by TA.
As a result of this complicated corporate structure, HPT is actually buying 40 of Petro’s truckstops for $630 million and leasing them to TA. And it is also paying for certain costs of the transaction, principally to cover debts secured by the Petro properties being acquired by HPT.
TA itself is paying $70 million for all of the other assets of Petro, including two fully owned facilities, one partially owned center, two leased centers operated by Petro, Petro’s franchisee business (which provides services to 24 centers operated by Petro franchisees), related businesses, land sites acquired for future development of new travel centers, inventory and other working capital. The deal also includes buying out Volvo Trucks North America’s 28.68% interest in Petro for $46.3 million, along with a smaller stake owned by ExxonMobil.
Petro’s Cardwell stressed that all of his company’s loyalty program contracts would remain in place and that customers should experience no disruption of services at Petro facilities during the merger.