Dive Brief:
- Arko Petroleum, the wholesale arm of convenience retailer Arko Corp., has agreed to acquire U.S. Petroleum Partners, a vertically integrated fuel supply and distribution platform serving the Great Lakes region, according to a Thursday announcement.
- USPP distributes about 280 million gallons of fuel annually to more than 400 wholesale locations. The deal also includes two fuel terminals and transportation assets. The consideration at closing will be $205 million in cash plus the cost of inventory.
- Arko Petroleum expects the deal to create growth through throughput expansion, incremental fee-based earnings streams and operational synergies.
Dive Insight:
Arko Petroleum’s strategy, much like what Arko Corp’s has been for years, is to grow through disciplined, accretive acquisitions, said Arie Kotler, chairman, president and CEO of both Arko Petroleum and Arko Corp., in Arko Corp’s earnings call last week. The USPP pickup is a big step in that direction.
“We believe this planned acquisition is not simply another acquisition; it is a strategic step that accelerates APC's growth plan, expands scale in attractive markets, and demonstrates the earning power we believe can be created from the APC platform,” said Kotler in the call.
Once the deal closes, Arko Petroleum will serve more than 2,500 wholesale locations, per the announcement. The fuel terminals are in Novi, Michigan, and Toledo, Ohio, and are connected to the Buckeye Pipeline system. The vehicles included in the deal transport over 80% of USPP’s fuel volumes. Arko Petroleum expects the acquisition to contribute about $30 million in annual EBITDA after closing, as well as enhance discretionary cash flow.
The deal is expected to close later this year, Kotler said during the call.
“APC gives us a second public platform for value creation while allowing Arko to remain focused on transforming the retail business,” said Kotler.
That retail transformation has included Arko Corp converting hundreds of company-owned c-stores to wholesale locations since mid-2024 as a way to reduce expenses. Arko Corp. transitioned 21 more locations to dealer sites as part of the program that had converted 471 locations through the end of Q2 2026, Kotler said in the call. The retailer also completed two renovations during Q2, with 12 more in progress, and opened one NTI. New and renovated stores offer the company’s Fas Craves food program, as well as an updated layout and new, productivity-focused technology and operating processes.
The company is seeing encouraging results from the new and updated stores.
“While several are still in [the] ramp-up stage, we are seeing returns approaching 20%, which gives us confidence as we look to accelerate the program in a disciplined way,” Kotler said.
