7-Eleven to Buy $21B Speedway Portfolio

The chain will acquire the collection of 3,900 convenience stores spanning 35 states from Marathon Petroleum Corp. in an all-cash transaction.
Speedway, Alamogordo, N.M. Image courtesy of Marathon Petroleum Corp.

North America’s largest convenience store chain is about to grow even larger. 7-Eleven Inc. will make its biggest single-transaction expansion in its decades-long history with the acquisition of convenience store chain Speedway. 7-Eleven, a wholly owned subsidiary of Tokyo-headquartered Seven & i Holdings Co. Ltd. since 2005, will purchase the high-quality, 3,900-store portfolio from Marathon Petroleum Corp. in an all-cash transaction of $21 billion.

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The collection of Speedway convenience store and retail gasoline station properties spans 35 states from coast to coast, and offers little overlap with 7-Eleven’s existing locations, while helping to diversify the convenience store giant’s presence in the Midwest and on the East Coast. Neither party has disclosed the size of the portfolio in land and square footage; however, Marathon’s criteria for Speedway sites is a minimum 1.5 acres and, according to statistics from the International Council of Shopping Centers, the stores range in size from 3,900 to 4,600 square feet each.

Upon completion of the transaction, 7-Eleven, which currently operates more than 9,800 stores ranging in size from 2,400 to 3,000 square feet in North America, will boast a portfolio of nearly 14,000 stores across the U.S. and Canada, with a footprint in 47 of the U.S.’s top 50 most populated metro areas. The agreement dovetails with 7-Eleven’s six-point plan for increasing revenue, which includes the growth of its store base as well as its modernization.

Convenient advantage

The purchase will provide 7-Eleven with additional advantages, including the bolstering of the company’s financial profile, enhanced economies of scale and a positive financial impact involving $5 billion of net sale-leaseback proceeds, for starters. 7-Eleven will finance the Speedway acquisition with a $13 billion bridge loan and an $8 billion equity infusion from its parent company, Seven & i.

For Marathon’s part, the company will pocket approximately $16.5 billion in after-tax proceeds, which will be directed toward repaying debt and returning capital to shareholders. The boards of directors of both companies have greenlighted the transaction by a unanimous vote. Pending customary closing conditions, the deal is on schedule to close in the first quarter of 2021. 7-Eleven plans to retain Speedway’s 40,000-member team.

Convenience stores, like dollar stores, are among the segments of the retail sector that are keeping above water amid the COVID-19 pandemic. In the first week of May 2020, spending in convenience stores rose 3.2 percent from the same period in 2019, according to a report by ResearchAndMarkets.com. While the number of trips declined, spending per transaction went on the upswing.

“One reason for the increase in spending is that many customers are trying to avoid busy supermarkets and are less inclined to shop around and risk exposure to the virus. As a result, some consumers have decided that stocking up on pantry staples and hygiene products in their local convenience stores is a safe option,” according to the report.