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British energy company BP p.l.c. (BP) announced the acquisition of TravelCenters of America (TA) last week, at a premium of almost 74% to TA’s closing price on February 15, 2023.
Around 70% of the company’s total gross margin is generated by its convenience services business.
TA’s shares were up 70% on February 16, 2023, following the announcement of BP’s acquisition of the company. According to BP, ‘Convenience’ is one of its five strategic transition growth engines in which it aims to significantly grow investment through this decade. The deal was announced a day after the Biden administration set new standards to invest $7.5 billion, in EV charging, $10 billion in clean transportation, and over $7 billion in EV battery components, critical minerals, and materials along routes that TravelCenters of America operates in. TravelCenters of America and Electrify America also announced that they will offer electric vehicle charging at select Travel Centers of America and Petro locations, with a goal of installing approximately 1,000 EV chargers at 200 locations along major highways over the next five years.
Under the terms of the agreement, BP Products North America Inc., a wholly-owned indirect subsidiary of BP p.l.c. will acquire TravelCenters of America for $86 per share in cash, representing a premium of 84% to TA’s 30 day average trading price ended February 15, 2023 of $46.68.
Bernard Looney, CEO of BP, said: “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 US 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 decarbonize their fleets. It’s a compelling combination.”