Speedway LLC announced Wednesday it has finalized a $2.8 billion acquisition of Hess Retail holdings that will nearly double its size.
Speedway, based in Enon and a subsidiary of Findlay-based Marathon Petroleum Corp., will become the largest company-owned convenience store chain in the U.S. based on revenue as a result of the acquisition. It will become the second-largest based on the number of stores. The deal includes all of Hess’ retail operations, transport operations and shipper history on various pipelines.
“This transformative acquisition provides Speedway a significant growth platform by expanding our retail presence to 23 states throughout the East Coast and Southeast,” said Gary R. Heminger, MPC president and CEO in a press release Wednesday.
After the acquisition was first announced in late July, Speedway also said it will spend $9.1 million to renovate its company headquarters in Enon and has since purchased a three-story building on Verona Drive at the NextEdge Applied Research and Technology Park on East National Road in Springfield. Speedway also pledged to create 350 jobs over the next three years.
Company officials said Wednesday construction at the NextEdge facility is underway, and is expected to be finished by the end of the year.
“We currently have approximately 65 employees working at the NextEdge facility,” said Stefanie Griffith, a spokesperson for Speedway. “ We are in the process of remodeling a portion of the building and adding more parking. All construction activities are scheduled to be completed by mid-December. Our current plans are to have approximately 200 employees working at the NextEdge facility by year-end.”
The state also approved a 60 percent, 10-year tax credit to Speedway in return for creating $14 million in annual payroll. The company will be required to maintain operations in Springfield for 13 years to retain the tax credit.
Speedway employees will be responsible for handling payroll and similar issues for a much larger company, so many of the jobs available now are in human resources and payroll, said Amy Donahoe, director of hiring and employer services for the Greater Springfield Chamber of Commerce.
However, Donahoe said the company also has open positions in information technology, finance, marketing, benefits, engineering and other fields.
“When you’re talking about the number of jobs they’re going to be hiring, it’s across the board,” Donahoe said.
Many of the positions are posted on Speedway’s website, Donahoe said. But prospective employees can also check with OhioMeansJobs of Clark County or the chamber, she added.
“Even if they don’t see something on the website they’re interested in it’s definitely worth looking into,” she said.
Speedway’s investment is important for Clark County because it will bring stable jobs to the region for a long time, said John Detrick, Clark County commissioner.
“It definitely enhances the opportunities for continued employment in Clark County,” Detrick said.
The $2.8 billion acquisition includes $2.4 billion in cash, $263 million in capital leases and $194 million of estimated working capital, according to information from Speedway. The combined company will have about 34,000 employees and projects revenues of more than $27 billion, fuel sales of 6.2 billion gallons and merchandise sales of $4.8 billion.
Speedway is expected to re-brand Hess stores to the Speedway identity, a process that will take about three years.
The convenience store industry has seen an increase in significant acquisitions in recent years, said Jeff Lenard, a spokesman for the Association for Convenience and Fuel Retailing.
“There have been a number of fairly substantial acquisitions in our industry for the last year or so,” Lenard said.
Earlier this year, the parent company for the Sunoco chain announced it would acquire Susser Holdings Corp. in a $1.8 billion deal. Susser operated about 630 convenience stores in Texas and neighboring states. Most of those stores operate under the Stripes brand.
There are a handful of reasons companies in the industry are looking to acquire other firms in order to grow.
“Financially, depending upon your balance sheet and the lending environment, terms are often favorable for companies seeking to acquire other companies at a favorable rate,” Lenard said.
In addition, many smaller, family-owned convenience stores are being sold instead of being handed down to the next generation, he said.
“It’s not quite the same as the late 1990s or early 2000s where all the major oil companies consolidated, but there has been quite a bit of merger and acquisition activity lately,” Lenard said.
Staying with the story
The Springfield News-Sun will continue to provide unmatched coverage of Speedway’s recent acquisition of Hess, an east coast convenience store chain. To provide the best coverage, the paper has spoken to company officials, analysts and local economic development officials to explain what the deal means for the region.
By the numbers:
34,000 — Total employees after the acquisition
800 — Current employees at Speedway’s Enon headquarters
350 — New jobs to be created by Speedway
23 — States with operations after the acquisition