By the standards of recent years the number of acquisitions by the Top 50 Indies has been quite modest since the 2017 listing was published in March. But that all changed in September, with a flurry of deals. However, with all the major sell-offs by oil companies completed, it is now smaller groups and fellow Top 50 Indies, rather than big tranches of sites, that are being snapped up.
MRH started the month with the acquisition of Chartman Group, which has 10 sites and was ranked 27th in the Top 50; and later in the month announced the acquisition of Peregrine Retail, which was heading for the next Top 50 listing with five very busy sites and more in the pipeline.
Meanwhile MFG completed the acquisition of four sites each from FW Kerridge and Burns & Co, and exchanged contracts on a deal to buy nine filling stations from Manor Service Stations, which was placed 20th in the Top 50.
The Top 50 is set for further changes due to a deal for Applegreen to buy seven sites from Carsley Group, which was ranked 33 in the listing.
Adam Wadlow, a director of property advisors Barber Wadlow, was unwilling to be drawn on whether all this activity means we should expect a new wave of deals in the Top 50, but said: "To some extent it is a coincidence that the deals have all happened at once, but it is indicative of the ongoing consolidation."
Funding for potential deals is likely to be available if needed. With both MRH and MFG backed by private equity funds, and Applegreen replenishing its coffers through a share issue last month, all three would appear to be well placed financially should a suitable opportunity become available. MFG’s intentions are emphasised by its recruitment as managing director, acquisitions and business development, of Michael O’Loughlin, who previously masterminded Applegreen’s massive growth as UK managing director. Euro Garages has made no high-profile filling station acquisitions since it snapped up eight sites when High Noon went into administration in January and its parent company Intervias Group has secured a deal to buy 1,176 Esso-branded service stations in Italy but it too has the resources to compete for groups of sites if they become available. Rontec has also kept a low profile in the market since it acquired 40 Co-op sites in the largest single acquisition last year, but is always reviewing opportunities.
Wadlow said many of the recent deals have been completely different and more complex than the ones when tranches of oil company sites were sold. He explained the transactions to buy oil company sites were basically real estate deals, while transactions with a smaller group tend to be a corporate deal where a limited company is bought. This means the big players have had to develop expertise in a new way of making deals.
There are several reasons why a group will be attractive to these larger players.
The most obvious is simply consolidating more sites into their business, enabling them to enhance their buying power and to run the new sites at a lower cost. But where groups are buying a well-run successful business they may be acquiring more than just greater scale. Wadlow said that often the companies being bought are retailing in different ways, and the bigger companies will be buying expertise which they can then spread through their business.
When it comes to finding suitable companies to buy, there are a number of dealers who are approaching retirement age and have no succession plan. With prices remaining robust they may be persuaded that now is the right time to sell. But Wadlow added: "There are also a lot of smaller companies, whose owners are nowhere near retirement age, and are very keen to grow their businesses, and they will be competing for individual sites."
So while there are likely to be more high-profile deals, there will also be intense competition for smaller sites too.
The oil companies are at it too
While the leading Top 50 Indies have been making eye-catching additions to their estates, two oil companies, Essar UK and Certas Energy, have added to demand in the sector with their own acquisitions.
Essar, which produces 16% of the UK’s road transport fuel demand through its Stanlow refinery, has bought its first site. It launched its branded offering for dealers late in 2015 and the network has grown to 39 filling stations. In its latest results it revealed that it has bought a former forecourt site near the refinery in Ellesmere Port, and intends to make it into its flagship company-owned site.
Certas has bought filling stations in England for the first time. It struck a deal with Preston-based Petromex Forecourt Services to acquire Millbrook Way in Preston and Canal Head in Ulverston, with a third, Harwood Bar, also in Preston, secured on a long-term dealer supply agreement. Certas said the acquisitions signal a step change as the existing portfolio of 26 sites run by Certas forecourt staff are all located in Scotland.
"Year-on-year we have been growing our business across the UK and this presented a perfect opportunity to create three flagship Gulf forecourts in the north of England," said retail director, Ramsay MacDonald. "We plan to implement changes in the next few months to enhance all three sites in what will be the largest single investment in COCO to date for Certas Energy and its parent company, DCC."