The Pantry, Inc. (PTRY), an independently operated convenience store chain in the southeastern U.S., announced Tuesday that it signed a definitive agreement to acquire 40 convenience stores from Herndon Oil Corp. using cash on hand. Financial terms of the deal were not disclosed. The company also revealed that it repurchased $26 million in principal amount of outstanding bonds in the second quarter ended March 2009.
According to Pantry, the acquisition includes the land of 32 of the 40 locations. The company said that 32 of the stores are located in Alabama, six in Florida, and two in Louisiana and Mississippi, and the stores operate under a variety of names, including the Flamingo banner. The company expects the acquisition to close in the second half of fiscal 2009.
Peter Sodini, chief executive of Pantry said, "This acquisition fills a gap in our existing store base and represents our initial entry into the attractive Mobile market. We expect this transaction to be accretive to our earnings per share in the first 12 months after closing."
Further, the company reported that during the second quarter, it repurchased $26 million in principal amount of its outstanding bonds, including $23 million of its 3.0% senior subordinated convertible notes and $3 million of its 7.75% senior subordinated notes, for a total price of about $19 million. Consequently, Pantry will include a pre-tax gain of over $6 million on the extinguishment of debt in its financial results for the quarter.
PTRY is currently trading at $19.68, down $0.40 or 1.99%, on the Nasdaq.
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