Global Partners LP (GLP) Monday said it has signed a definitive agreement to acquire 100 percent of the membership interests of Alliance Energy LLC, for an enterprise value of around $296 million, to expand its presence in New England gasoline distribution and retail gasoline market.
Global Partners will issue 5.85 million limited partner units to Alliance's owners and assume long-term debt of $180 million. Based on Global Partners' November 18 closing price of $19.89 per unit, the deal has an enterprise value of around $296 million.
Alliance is a gasoline distributor as well as a gasoline station and convenience store operator. Its portfolio includes 542 gasoline stations in New England, New York, New Jersey and Pennsylvania. Alliance owns or has long term leases on 257 sites and has supply contracts for 285 sites.
Alliance is 95 percent owned by members of the Slifka family, who also own the Partnership's general partner, Global GP LLC.
The transaction is expected to be accretive in the first full year of operation. Based on the value of the deal and the current operating and anticipated performance of the Alliance business, as well as economic and market conditions, expected cash return, prior to financing costs, is in the low-to-mid-teens in the first full year.
Eric Slifka, president and chief executive officer of Global Partners, said, "The acquisition of Alliance significantly enhances the value of the Partnership. Building on the success of our 2010 acquisition of the Mobil assets, this transaction creates additional vertical integration between our supply, terminaling, wholesale business and our expanding portfolio of gas station sites."
The terms of the transaction were unanimously approved by the Board of Directors of Global GP. The deal is expected to close in the first quarter of 2012.
In preparation for closing the deal, Global Partners plans to increase the acquisition tranche of its revolving credit facility by $100 million. When the deal is closed, Alliance President Andrew Slifka will join Global Partners as president of the Partnership's retail business, including its existing Mobil assets. He will also become a member of the Board of Global GP LLC.
GLP closed Friday's regular trade at $19.89, up from the prior close of $19.48, on 34,900 shares.
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