Applegreen agrees to buy South Carolina forecourt chain

The AIM-traded company said that under the terms of the transaction, Applegreen would acquire the trade and certain assets of the Brandi Group for consideration of $5.4m - inclusive of working capital - and an unnamed US institutional real estate investor would acquire certain property assets of the business for $70.1m.

At completion, Applegreen will enter into a long term agreement with the same real estate investor to lease the property assets.

Completion of the transaction remained subject to a number of conditions and, pending satisfaction of those conditions, was expected to complete in the fourth quarter of 2017.

“We are delighted to announce our first major acquisition in the US which represents a significant milestone for our business,” said Applegreen chief executive Bob Etchingham.

“We consider the Brandi Group to be an excellent fit for our business given the attraction and convenience of its locations centred in the city of Columbia together with the significant component of food-to-go offers that exists within the estate.”

The business comprised a total of 42 sites located in or close to the city of Columbia, the state capital of South Carolina.

Applegreen said 34 of those sites were petrol filling stations, which incorporated 11 Burger King restaurants and a number of other food offers including Subway and Blimpie.

In addition, the business operated eight stand-alone Burger King sites.

The company said the Brandi Group currently generated an adjusted EBITDA of $3m, and was expected to be earnings-accretive in 2018.

It said the consideration of $5.4m was being funded from existing resources.

“We believe that this acquisition represents an opportunity to establish a significant presence in this market while also providing the potential for us to leverage our retail experience in this sector to enhance the current offering,” Bob Etchingham added.

“It also represents an ideal platform from which to further pursue our strategy for growth along the East Coast of the US.”

The current owner committed to working with the existing management team for the first 12 months to ensure an orderly transition of operations to Applegreen, the board reported.

It said it would supplement those existing resources with additional Applegreen finance and operational personnel to ensure a successful integration of the business.