With the two biggest members of Forecourt Trader’s Top 50 Indies snapping up more and more of the other groups in the listing, it was only a matter of time before they began to consider the biggest deal of all, but its timing still took many people by surprise.

It was known that Lone Star, the US private equity firm that owned MRH, had been considering its options, and naturally MFG and its US backers Clayton Dubilier & Rice (CD&R) were interested. But when MRH announced on February 15 that it had made two senior management appointments and recruited a new chairman, most people interpreted this as a preparation for an IPO. But just 12 days later the two sides announced that MFG would be acquiring its larger rival in a £1.2bn deal. Together MRH and MFG operate more than 930 sites with fuel brands BP, Esso, Jet, Murco, Shell and Texaco and retail brands Budgens, Costa Coffee, Greggs, Spar and Subway, as well as MRH’s own brand Hursts. And, on a combined basis, MFG and MRH sold approximately 3.6 billion litres of fuel in 2017.

Alasdair Locke, chairman of MFG, will remain chairman of the combined business. Former Tesco chief executive Sir Terry Leahy, a senior advisor to CD&R, will continue to serve on the board of directors and chair the executive committee of the board.

"Both MFG and MRH operate in a stable market and are highly focused on convenience with a track record of consistent growth and commitment to operational excellence," said CD&R partner Marco Herbst. "As petrol forecourts transition to customer-focused convenience and food-to-go hubs for local communities, this platform is distinctly positioned to meet this growing demand across the UK."

Tranformational milestone

"This is a transformational milestone for both companies that we believe will make us an even stronger partner for fuel brands and retail customers seeking convenient foodservice options," said Alasdair Locke, chairman of MFG. "We are excited to welcome the MRH team, who share a commitment to growth and innovation, as we work together to consolidate a highly-fragmented market and continue our expansion across the combined estate."

Karen Dickens, chief executive of MRH, said: "Over the last few years we have developed MRH into one of the leading players in the sector thanks to the hard work and focus of the MRH team. The combination of MRH and MFG will create the UK’s leading service station group and one of the largest in Europe. We are delighted to have reached this agreement and look forward to an exciting future together."

Donald Quintin, president, Europe, Lone Star, commented: "We’re pleased to have found in MFG the right partner for MRH’s next stage of development. It’s been a pleasure to work with Karen and the whole MRH team over the last few years, and we wish them every success."

The transaction is expected to close soon, subject to regulatory approval.

MFG is now in the driving seat, but until this deal MRH had held a dominant position in Forecourt Trader’s Top 50 Indies since the listing’s inception in 2006. The company, then known as Malthurst, was set up in 1997 and after acquiring a number of packets of sites from various oil companies it claimed the top position in the first Top 50 with 146 sites. In addition, a separate company called Pace, which had the same set of directors, held second position with 127 sites. Meanwhile, Motor Fuel Group (MFG) had been set up by Sailesh Sejpal, known as Sej, and Sharad Raja (Raj) in 2001, and claimed the eighth position in the inaugural Top 50 with 27 sites.

When Malthurst and Pace were combined in 2009 to form MRH, its lead over other companies in the Top 50 extended and by 2011 it boasted 325 sites while fifth-positioned MFG had accumulated 68 sites. Then just before Christmas 2011, Sej, Raja and fellow director Tony Head sold MFG to a new management team backed by a group of investors including Scottish tycoon Alasdair Locke and investment company Patron Capital.

Locke had sold his oil services group Abbot Group for $1.4bn in 2008. In early 2012, Murco’s retail marketing director, Jeremy Clarke, was recruited as managing director.

A statement on the company’s website at the time said it was focused on growing "into one of the most dynamic and profitable independent forecourt operators in the UK", but during the following two-and-a-half years it achieved a net gain of just two sites to reach 60, and climbed one place in the Top 50 to fourth. Over the same period MRH acquired 31 Esso sites in Scotland and grown to 381 sites.

step change

The step change for MFG came with the acquisition of Murco Petroleum’s retail assets in October 2014, instantly boosting its estate to 288 (as well as supplying 220 Murco dealers) and catapulting it into second place in the Top 50. With Esso and Shell selling off large tranches of sites, both companies grew substantially in 2015 with MFG adding 91 Shell sites to reach 375, and MRH acquiring 78 Esso sites to reach 452.

The next major game changer came with the involvement of US private equity companies. In June 2015, Clayton Dubilier & Rice bought out Patron Capital’s share of MFG in a £500m deal and in January 2016, Lone Star bought MRH for an undisclosed sum.

Having exhausted the supply of oil company-owned sites, the top two then began a series of acquisitions of other groups within the Top 50 and by January 2018 MRH was just shy of 500 sites with 491 and MFG had grown to 439.

It remains to be seen whether the competition authorities insist on sell-offs of any sites where a local monopoly is created, but the deal has the potential to create a group with more than 900 sites, out of a total UK market of 8,400 forecourts, and an independent sector totalling about 5,600 sites.

Although the new entity will wield considerable financial clout, it is unlikely the competition authorities will consider this a reason to block the deal. Their concern is whether consumers will end up paying more and the supermarkets’ stranglehold on fuel prices is unlikely to be affected. And while smaller independents may be daunted by the scale of this new competitor, there could be a window of opportunity. While management focuses inward on the massive task of integrating this huge company, it’s likely to have little appetite for more acquisitions and may even have to divest some sites. This could be just the opportunity smaller, acquisitive dealers have been hoping for.


1997: Formation of Malthurst
2001: Sailesh Sejpal (Sej) and Sharad Raja (Raj) set up MFG
2006: Malthurst is number one in inaugural Top 50 Indies with 146 sites
2009: Malthurst and Pace merge to form MRH
2011: New management group buys MFG with backing from investors
2014: MFG buys Murco Petroleum’s retail interest taking it to 288 sites. MRH buys 31 Esso sites
2015: MRH buys 78 Esso sites. Shell sells 91 sites to MFG. US private equity firm Clayton Dubilier & Rice buys MFG
2016: MRH is bought by US private equity firm Lone Star
2018: MFG agrees £1.2bn deal to buy MRH.