Haymaker Acquisition Corp. II (NASDAQ: HYAC) (“Haymaker”), a
publicly traded special purpose acquisition company, ARKO Holdings
Ltd. (“Arko”), an Israeli public holding company (TASE: ARKO) and
GPM Investments, LLC (“GPM” or the “Company”), announced today that
they have entered into a letter of intent (“LOI”) for a business
combination. The business combination would result in 100% of
both GPM and Arko combining with Haymaker with substantial rollover
from existing equityholders; currently Arko owns 68% of GPM and the
remaining 32% is held by Davidson Kempner Capital Management LP,
funds managed by Ares Management Corporation, and Harvest Partners
SCF, L.P.
Based in Richmond, VA, the Company was founded in
2003 with 169 stores and has, since control was acquired by Arko in
2011, grown through acquisition to become a leading convenience
store operator with 1,400 locations in 23 states comprised of 1,272
company-operated stores and 128 additional sites to which it
delivers fuel. GPM is the 7th largest convenience store chain
in the United States. The Company operates in three segments:
retail, which consists of fuel and merchandise sales to retail
consumers; wholesale, which supplies fuel to third-party dealers
and consignment agents; and GPM Petroleum, which supplies fuel to
Company stores as well as independent operators and bulk
purchasers.
Arie Kotler, Chief Executive Officer of Arko and
GPM, commented: “I am very excited about this combination. We have
a demonstrated history of profitable growth and a track record of
executing consolidation opportunities. Combining with Haymaker as a
Nasdaq-listed, pure-play operator of convenience stores greatly
enhances our ability to execute our growth strategy in a large,
growing, recession resistant industry, while driving value for our
combined shareholders.”
Steven Heyer, CEO and Executive Chairman of
Haymaker, commented: “The proposed transaction with Arko and GPM
meets all of the strategic criteria we developed for Haymaker. This
is a sizeable transaction at approximately $1.5 billion in
enterprise value, with a business that has scale, geographic
diversity and significant growth opportunities, led by Arie and a
strong management team with public market experience. We intend to
continue growing the GPM platform and to pursue strategic
initiatives jointly with Arie, a proven consolidator and operator.
The structure of the proposed business combination is also
appealing – we expect long-term institutional investors and
management to roll over significant equity at an attractive
valuation relative to U.S.-listed peers.”
Highlights of the proposed
transaction:
- The Company has grown through acquisition to become the 7th
largest convenience store chain in the United States, with 1,272
company-operated locations, excluding pending acquisitions, in 23
states. The Company has increased its store count approximately
4.4x over the past seven years.
- The Company projects its EBITDA will have grown at a 28%-29%
compound annual growth rate (“CAGR”) from 2016 through
2020E.
- The convenience store industry has demonstrated long-term
growth yet remains highly fragmented. The industry has grown at a
3.4% CAGR since 2007 (per NACS State of the Industry Report). The
top ten companies control less than 20% of the store base in the
United States, providing significant opportunities for future
growth.
- The Company’s growth has accelerated in more recent months
during the COVID-19 pandemic as consumers shift shopping patterns
to convenience stores from other channels. The Company will
also benefit substantially if travel patterns in the United States
shift from flying to driving. Furthermore, the convenience
store channel experienced growing sales in the recessionary period
of 2008-2009.
- The combined company will be led by GPM’s current management
team, which has significant industry and public market experience,
including Arko’s and GPM's Chief Executive Officer, Arie Kotler.
Arko and GPM will also benefit from Haymaker’s investing and
operational experience at Fortune 500 companies, particularly in
the consumer and hospitality sectors.
Details of the proposed
transaction: Under the terms of the LOI, the enterprise
value of the combined company is approximately $1.5 billion,
implying ~9.0x estimated proforma 2021E Adjusted EBITDA.1
Haymaker and Arko will announce additional details regarding
the proposed business combination when a definitive agreement is
executed, which is expected to occur in the third quarter of this
year, with a closing anticipated before year end.
No assurances can be made that the parties will
successfully negotiate and enter into a definitive agreement, or
that the proposed transaction will be consummated on the terms or
timeframe currently contemplated, or at all. Any transaction would
be subject to board and equityholder approval of all companies,
regulatory approvals, and other customary conditions.
Raymond James & Associates, Inc. is serving as
financial and capital markets advisor, Cantor Fitzgerald & Co.
is serving as capital markets advisor, Stifel, Nicolaus &
Company, Incorporated and Citigroup Global Markets Inc are serving
as co-financial advisors and capital markets advisors and DLA Piper
LLP (US), Gornitzky & Co., and Ellenoff Grossman & Schole
LLP are serving as legal advisors to Haymaker. Greenberg
Traurig, LLP and S. Friedman & Co. are acting as legal advisors
to Arko and GPM.
Investor Information: Haymaker and
Arko have made available a related investor presentation with more
detailed information regarding the proposed transaction at
www.haymakeracquisition.com. The investor presentation will also be
furnished today to the United States Securities and Exchange
Commission (the “SEC”), which can be viewed at the SEC’s website at
www.sec.gov.
About GPM and Arko: Based in
Richmond, VA, the Company was founded in 2003 with 169 stores and
has grown through acquisition to become the 7th largest convenience
store chain in the United States, with 1,400 locations comprised of
1,272 company-operated stores and 128 dealer sites to which it
delivers fuel, in 23 states. GPM operates in three segments:
retail, which consists of fuel and merchandise sales to retail
consumers; wholesale, which supplies fuel to third-party dealers
and consignment agents; and GPM Petroleum, which supplies fuel to
GPM stores as well as a small number of independent operators and
bulk purchasers.
Arko is the controlling shareholder of GPM (owns
~68%) and, as part of the proposed transaction, the shares of Arko
will be de-listed from Tel-Aviv stock exchange. At the
closing of its business combination with Haymaker, Arko will have
no material independent operating activities, income, or net
assets.
About Haymaker: Haymaker is a $400
million blank check company formed for the purpose of entering into
a merger, capital stock exchange, asset acquisition, stock
purchase, reorganization or similar business combination with one
or more businesses. Haymaker’s acquisition and value creation
strategy is to identify, acquire and, after its initial business
combination, build a company in the consumer, retail, media, or
hospitality industries. Haymaker is led by Chief Executive Officer
and Executive Chairman Steven J. Heyer, President Andrew R. Heyer,
and Chief Financial Officer Christopher Bradley. For more
information about Haymaker, please visit
www.haymakeracquisition.com.
Additional Information and Where to Find
ItIf a definitive agreement is entered into in connection
with the proposed business combination, Haymaker will prepare a
proxy statement/prospectus (the “Haymaker proxy
statement/prospectus”) to be filed with the SEC and mailed to
Haymaker’s stockholders. In addition, Arko will prepare a proxy
statement (the “Arko proxy”), to be filed with the Israel
Securities Authority (the “ISA”). Haymaker and Arko urge investors
and other interested persons to read, when available, the Haymaker
proxy statement/prospectus and the Arko proxy, as well as other
documents filed with the SEC and the ISA, because these documents
will contain important information about the proposed business
combination. Such persons can also read Haymaker’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2019 (the
“Haymaker Annual Report”), for a description of the security
holdings of its officers and directors and their respective
interests as security holders in the consummation of the
transactions described herein. The Haymaker proxy statement
statement/prospectus, once available, and Haymaker Annual Report
can be obtained, without charge, at the SEC’s web site
(http://www.sec.gov).
Participants in the
SolicitationHaymaker, Arko and their respective directors,
executive officers and other members of their management and
employees, under SEC rules, may be deemed to be participants in the
solicitation of proxies of Haymaker stockholders in connection with
the proposed business combination.Investors and security holders
may obtain more detailed information regarding the names,
affiliations and interests of Haymaker’s directors and officers in
its Annual Report on Form 10-K for the fiscal year ended December
31, 2019, which was filed with the SEC on March 19, 2020.
Information regarding the persons who may, under SEC rules, be
deemed participants in the solicitation of proxies to Haymaker’s
stockholders in connection with the proposed business combination
will be set forth in the proxy statement/prospectus for the
proposed business combination when available. Information
concerning the interests of Haymaker’s and Arko’s participants in
the solicitation, which may, in some cases, be different than those
of Haymaker’s and Arko’s equityholders generally, will be set forth
in the proxy statement/prospectus relating to the proposed business
combination when it becomes available.
Forward-Looking Statements:This
press release includes “forward-looking statements” within the
meaning of the “safe harbor” provisions of the Private Securities
Litigation Reform Act of 1995. The expectations, estimates, and
projections of the businesses of Haymaker, Arko and GPM may differ
from their actual results and consequently, you should not rely on
these forward looking statements as predictions of future events.
Words such as “expect,” “estimate,” “project,” “budget,”
“forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,”
“should,” “believes,” “predicts,” “potential,” “continue,” and
similar expressions are intended to identify such forward-looking
statements. These forward-looking statements include, without
limitation, expectations with respect to future performance
including projected financial information (which is not audited or
reviewed by auditors) and anticipated financial impacts of the
proposed transaction, the satisfaction of the closing conditions to
the proposed transaction, and the timing of the completion of the
proposed transaction. These forward-looking statements involve
significant risks and uncertainties that could cause the actual
results to differ materially from the expected results. Most of
these factors are outside of the control of Haymaker, Arko and GPM,
and are difficult to predict. Factors that may cause such
differences include, but are not limited to: (1) the occurrence of
any event, change or other circumstances that could give rise to
the termination of the negotiations and any subsequent definitive
agreements with respect to the proposed business combination, and
the possibility that the terms and conditions set forth in any
definitive agreements with respect to the proposed business
combination may differ materially from the terms and conditions set
forth in the term sheet, (2) the outcome of any legal proceedings
that may be instituted against the parties following the
announcement of the proposed business combination and any
definitive agreements with respect thereto; (3) the inability to
complete the proposed transaction, including due to failure to
obtain approval of the stockholders of Haymaker and Arko or other
conditions to closing; (4) the impact of the COVID-19 pandemic on
(x) the parties' ability to negotiate and consummate the proposed
business combination and (y) the business of Arko, GPM, and the
combined company; (5) the receipt of an unsolicited offer from
another party for an alternative business transaction that could
interfere with the proposed transaction; (6) the inability to
obtain or maintain the listing of the post-acquisition company’s
common stock on Nasdaq following the proposed transaction; (7) the
risk that the proposed transaction disrupts current plans and
operations as a result of the announcement and consummation of the
proposed transaction; (8) the ability to recognize the anticipated
benefits of the proposed transaction, which may be affected by,
among other things, competition, the ability of the combined
company to grow and manage growth profitably and retain its key
employees; (9) costs related to the proposed transaction; (10)
changes in applicable laws or regulations; (11) the demand for
GPM’s, and the combined company’s services together with the
possibility that Arko, GPM or the combined company may be adversely
affected by other economic, business, and/or competitive factors;
(12) the failure of GPM to consummate any pending acquisitions;
(13) risks and uncertainties related to Arko’s business, including,
but not limited to, changes in petroleum prices, the impact of
competition, environmental risks, restrictions on the sale of
alcohol, cigarettes, vaping products and other tobacco products and
increases in their prices, dependency on suppliers, increases in
fuel efficiency and demand for alternative fuels for electric
vehicles, failure by independent outsider operators to meet their
obligations, acquisition and integration risks, and currency
exchange and interest rates risks; and (14) other risks and
uncertainties included in (x) the “Risk Factors” sections of the
most recent Annual Report on Form 10-K and Quarterly Report on Form
10-Q filed with the SEC by Haymaker and (y) other documents filed
or to be filed with the SEC by Haymaker and the ISA by Arko. The
foregoing list of factors is not exclusive. You should not place
undue reliance upon any forward-looking statements, which speak
only as of the date made. Haymaker, Arko, and GPM do not undertake
or accept any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statements to reflect
any change in their expectations or any change in events,
conditions, or circumstances on which any such statement is
based.
No Offer or SolicitationThis press
release shall not constitute a solicitation of a proxy, consent, or
authorization with respect to any securities or in respect of the
proposed transaction. This press release shall also not constitute
an offer to sell or the solicitation of an offer to buy any
securities, nor shall there be any sale of securities in any states
or jurisdictions in which such offer, solicitation, or sale would
be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offering of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as
amended.
Non-GAAP Financial MetricsThis
press release includes non-GAAP financial measures for the Company
which do not conform to SEC Regulation S-X in that it includes
financial information (such as EBITDA and Adjusted EBITDA) not
derived in accordance with U.S. generally accepted accounting
principles (“GAAP”). The Company believes that the presentation of
non-GAAP measures provides information that is useful to investors
as it indicates more clearly the ability of the Company to meet
capital expenditure and working capital requirements and provides
an additional tool for investors to use in evaluating ongoing
operating results and trends. You should review the Company’s
audited and interim financial statements, which will be presented
in the Haymaker proxy statement/prospectus (defined under
Additional Information and Where to Find It), and not rely on any
single financial measure to evaluate its business. Other companies
may calculate EBITDA, Adjusted EBITDA and other non-GAAP measures
differently, and therefore the Company’s EBITDA, Adjusted EBITDA
and other non-GAAP measures may not be directly comparable to
similarly titled measures of other companies.
Investor ContactFarah Soi,
CFA(203) 682-8200HaymakerII@icrinc.com
Media ContactKeil Decker(646)
277-1200HaymakerII@icrinc.com
1 2021E Adjusted EBITDA is calculated as EBITDA (i)
plus acquisition costs, non-cash rent, state franchise taxes,
losses on disposals of assets and other non-recurring items, and
(ii) less gains on disposals of assets. Assumes closing of signed,
pending acquisitions and execution of other growth initiatives.
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