ARKO to Buy U.S. Petroleum Partners Business for $205 Million
The transaction would broaden ARKO Petroleum’s platform and accelerate the growth strategy set at its initial public offering.
ARKO Petroleum Corp. (ARKO) agreed to acquire the business of U.S. Petroleum Partners, LLC for approximately $205 million in cash plus the cost of inventory, a transaction that would expand the company’s platform and advance the growth strategy it outlined at the time of its initial public offering.
The agreement separated the roughly $205 million purchase price from the inventory payment, leaving the final cash outlay partly dependent on the inventory transferred at closing. ARKO described the transaction as strategic and said the acquired business would meaningfully expand its operating platform. The company didn’t disclose a premium, exchange ratio, or expected closing date in the announcement details.
Management tied the acquisition to the composition and durability of the company’s earnings. “This transaction is expected to expand our predominantly fee-based and fixed-margin earnings profile, enhance our cash flow generation capabilities and strengthen our ability to create long-term value for shareholders,” Chairman, President and Chief Executive Officer Arie Kotler said.
The purchase would give ARKO another avenue to pursue the expansion plan presented alongside its initial public offering. The emphasis on fee-based and fixed-margin earnings framed the transaction around cash-flow generation and the shape of the combined business’s earnings, while the added platform scale would support the company’s broader growth program. Those benefits remain forward-looking until the transaction closes and the acquired operations are integrated.
The agreement followed other transactions aimed at adding scale in energy infrastructure and fuel distribution. USA Compression Partners agreed in December 2015 to acquire J-W Power Company for about $860 million in equal parts cash and common units, expanding its service fleet and geographic reach. Sunoco’s proposed acquisition of Parkland, valued at approximately $9.1 billion including assumed debt, likewise paired cash and equity while seeking greater scale across fuel-distribution operations. Together, the transactions reflected continued use of acquisitions to broaden operating footprints and reinforce recurring or infrastructure-linked earnings.
For ARKO, the next phase centers on converting the added platform into the fee-based and fixed-margin earnings profile management described. The inventory payment means the amount funded at closing will exceed the stated $205 million purchase price, with the ultimate total determined by the inventory acquired. The transaction’s strategic case rests on whether that expanded base strengthens cash generation and advances the growth plan ARKO set when it entered the public market.