BP Products North America Inc., a wholly-owned indirect subsidiary of BP p.l.c. has reached an agreement to purchase TravelCenters of America, one of the country’s leading full-service travel center operators, for $1.3bn in cash.
TA’s strategically-located network of highway sites complements bp’s existing predominantly off-highway convenience and mobility business, enabling TA and bp to offer fleets a seamless nationwide service. In addition, bp’s global scale and reach will, over time, bring advantages in fuel and biofuel supply as well as convenience offers for consumers. It will provide options to expand and develop new mobility offers including electric vehicle (EV) charging, biofuels, renewable natural gas (RNG) and later hydrogen, both for passenger vehicles and fleets.
Goldman Sachs & Co. LLC is acting as lead financial adviser to bp, Robey Warshaw LLP is acting as financial adviser to bp, and Sullivan & Cromwell LLP is acting as lead legal adviser to bp.
Convenience is one of bp’s five strategic transition growth engines in which it aims to significantly grow investment through this decade. By 2030, bp aims for around half its annual investment to go into these transition growth engines. Over 2023-2030 it aims that around half of its cumulative $55-65bn transition growth engine investment will go into convenience, bioenergy and EV charging.
Bernard Looney, CEO bp, said: “This is bp’s strategy in action. We are doing exactly what we said we would, leaning into our transition growth engines. This deal will grow our convenience and mobility footprint across the US and grow earnings with attractive returns. Over time, it will allow us to advance four of our five strategic transition growth engines. By enabling growth in EV charging, biofuels and RNG and later hydrogen, we can help our customers decarbonize their fleets. It’s a compelling combination.”
The acquisition is expected to bring around 280 TravelCenters of America sites, spanning 44 US states nationwide, into the bp portfolio. These travel centers, which average around 25 acres, offer a full range of facilities for vehicles and fleet trucks, including more than 600 full-service and quick service restaurants, as well as truck maintenance and repair services. Around 70% of TA’s total gross margin is generated by its convenience services business, almost double bp’s global convenience gross margin.
Dave Lawler, chairman and president of bp America: “Subject to approvals, we look forward to welcoming the TA team to bp. TA’s amazing nationwide network of on-highway locations combined with bp’s more than 8,000 off-highway locations have the potential to offer travelers and professional drivers a seamless experience for decades to come.”
bp yesterday announced plans to invest $1bn in EV charging across the US by 2030.
As part of the transaction, TA will enter into amended lease agreements with Service Properties Trust, establishing long-term real estate access. bp looks forward to continuing TA’s existing strong relationship with SVC.
The acquisition price of $1.3bn, or $86 per share, represents a multiple of around 6 times based on last twelve months’ TA EBITDA (4Q21 to 3Q22). It is expected to add EBITDA for bp immediately, growing to around $800m in 2025.
It supports delivery of bp’s convenience and EV charging growth engine target of more than $1.5bn EBITDA in 2025 and aim for more than $4bn in 2030. bp expects the acquisition to be accretive to free cash flow per share from 2024 and to deliver a return of over 15%.
