- Mergers & Acquisitions
bp to acquire TravelCenters of America for USD1.3 billion
BP Products North America Inc., a wholly-owned indirect subsidiary of BP p.l.c. has reached an agreement to purchase TravelCenters of America, one of the leading full-service travel center operators in the United States. The acquisition, which is subject to regulatory and approval of TravelCenters of America shareholders, will be for USD1.3 billion in cash.
Convenience is one of bp’s five strategic transition growth engines in which it aims to significantly grow investment through this decade. TA’s strategically-located network of highway sites complements bp’s existing predominantly off-highway convenience and mobility business, enabling TA and bp to offer fleets a seamless nationwide service.
By 2030, bp aims for around half its annual investment to go into these transition growth engines. Over 2023-2030 it aims that around half of its cumulative USD55-65 billion transition growth engine investment will go into convenience, bioenergy and EV charging.
“This is bp’s strategy in action. We are doing exactly what we said we would, leaning into our transition growth engines. This deal will grow our convenience and mobility footprint across the U.S. and grow earnings with attractive returns. Over time, it will allow us to advance four of our five strategic transition growth engines. By enabling growth in EV charging, biofuels and RNG and later hydrogen, we can help our customers decarbonise their fleets. It’s a compelling combination,” Bernard Looney, CEO of bp, said.
The acquisition is expected to bring around 280 TravelCenters of America sites, spanning 44 U.S. states nationwide, into the bp portfolio. These travel centers, which average around 25 acres, offer a full range of facilities for vehicles and fleet trucks, including more than 600 full-service and quick service restaurants, as well as truck maintenance and repair services. Around 70% of TA’s total gross margin is generated by its convenience services business, almost double bp’s global convenience gross margin.
“Subject to approvals, we look forward to welcoming the TA team to bp. TA’s amazing nationwide network of on-highway locations combined with bp’s more than 8,000 off-highway locations have the potential to offer travelers and professional drivers a seamless experience for decades to come,” said Dave Lawler, chairman and president of bp America.
As part of the transaction, TA will enter into amended lease agreements with Service Properties Trust, establishing long-term real estate access. bp looks forward to continuing TA’s existing strong relationship with SVC.
The acquisition price of USD1.3 billion, or USD86 per share, represents a multiple of around six times based on TA’s last 12 months’ EBITDA (earnings before interest, taxes, depreciation and amortization. It is expected to add EBITDA for bp immediately, growing to around USD800 million in 2025.
The acquisition supports delivery of bp’s convenience and EV charging growth engine target of more than USD1.5 billion EBITDA in 2025 and aims for more than USD4 billion in 2030. bp expects the acquisition to be accretive to free cash flow per share from 2024 and to deliver a return of more than 15%.
Goldman Sachs & Co. LLC is acting as lead financial adviser to bp, Robey Warshaw LLP is acting as financial adviser to bp, and Sullivan & Cromwell LLP is acting as lead legal adviser to bp.