|Nov 19, 2020||
ARKO / GPM and Haymaker Acquisition Corp. II Announce Business UpdatesRICHMOND, Va., Nov. 19, 2020 (GLOBE NEWSWIRE) -- ARKO Holdings Ltd. (TASE: ARKO), (“Arko”), whose primary asset is a controlling stake in GPM Investments, LLC (“GPM” or the “Company”), a rapidly growing leader in the U.S. convenience store industry, and who entered into a definitive business combination agreement with Haymaker Acquisition Corp. II (NASDAQ: HYAC), (“Haymaker”), a publicly-traded special purpose acquisition company (SPAC), today announced the following:
In conjunction with the previously announced business combination, affiliates of MSD Partners, L.P. will purchase up to $100 million of convertible preferred stock to support the combined entity’s future growth objectives.
“We have a long history of identifying and investing in attractive businesses with strong growth potential and led by outstanding management teams. GPM is well positioned to benefit from meaningful growth opportunities resulting primarily from its store refurbishment program and acquisition strategy,” said Scott Segal, co-Portfolio Manager and Managing Director of MSD Partners. “Arie and the management team have done an exceptional job growing the business and successfully integrating acquisitions over time, and we are excited to invest alongside them in this transaction.”
“We believe MSD Partners’ investment is a strong vote of confidence in the ARKO/GPM business model and the substantial opportunities for growth that lie ahead,” added Arie Kotler, Chairman and CEO of Arko Holdings.
“MSD Partners has a deep understanding of the convenience store industry and the very attractive multi-pronged growth opportunity for the combined company. They recognize the material long-term earnings potential of our store remodel program, combined with recently higher fuel margins,” said Andrew Heyer, President of Haymaker Acquisition Corp. II. “As we move towards the closing of the transaction, this investment positions us well to continue to focus on driving many of the value creation activities we have planned.”
MSD Partners’ investment of up to $100 million in convertible preferred stock will occur concurrently with the closing of the business combination. The convertible preferred stock will carry a 5.75% cumulative dividend. The preferred stock will be convertible into shares of common stock at a conversion price of $12.00 per share, representing a premium of 19.5% to Haymaker’s closing price of $10.04 on November 18, 2020.
Following strong year-to-date results and the recent acquisition of Empire Petroleum Partners’ fuel distribution business and retail locations, the Company has raised its projection for fiscal 2020 and expects to deliver adjusted EBITDA1, excluding 2020 results from our recently acquired Empire business, in the range of $163 million to $167 million compared to its prior projection of $145 million to $150 million. The Company had achieved 94% of its previously projected adjusted EBITDA by September 30, 2020, and achieved positive same store sales in October of 4.8% with performance accelerating as same store sales for the first two weeks of November increased 7.1%. These results, in conjunction with lower expenses and higher fuel profit margins than anticipated, are the foundation for the revised guidance.
The Company’s higher fuel margin, plus its continuing positive in-store same store sales growth, together with the Company’s enhanced store remodel program, have caused the Company to project more robust performance for 2021. The Company’s revised projections for 2021 indicate that it will achieve adjusted EBITDA in the range of $217 million to $223 million compared to its prior projection of $210 million to $215 million.
1Adjusted EBITDA is calculated as EBITDA further adjusted by excluding the gain or loss on disposal of assets, impairment charges, acquisition costs, other non-cash items, and other unusual or non-recurring charges. Pro forma Adjusted EBITDA gives effect to acquisitions and synergies for the entire period presented irrespective of the actual timing of acquisitions or commencement of synergies during the period.
Arko Holdings Ltd. Shareholder Vote and Approval
On November 18, 2020, Arko Holdings Ltd. shareholders approved the proposed business combination between Arko and Haymaker.
Arie Kotler, Chairman and CEO of Arko Holdings, commented, “This vote was an important milestone for Arko, and we are thrilled to receive the support of our shareholders as we move forward with our business combination with Haymaker. As I have previously stated, I am proud to be rolling over at least 90% of my ownership to become the combined company’s largest individual investor, joining seasoned institutional investors including Davidson Kempner, Ares and Harvest Partners who have elected to rollover 100% of their current equity holdings. We believe we have a long runway of growth in this attractive and fragmented industry and look forward to building on our track record of success as we look towards the completion of our business combination and resulting Nasdaq listing.”
A special meeting of stockholders of Haymaker will be held on December 8, 2020, at 10:00 am, Eastern Time, to approve, among other things, the business combination with Arko and GPM.
Enhanced Store Remodel Program
In a separate release issued today Arko unveiled plans for its store prototype of the future, which plans include complete store interior and exterior redesigns, improved customer experience and expanded food and beverage offerings. The release is available at https://haymakeracquisition.com/home/.
The Company is scheduled to present at the Stephens Annual Investment Conference today, Thursday, November 19, 2020, at 1:00 pm Eastern Time.
The presentation will be webcast live over the internet and can be accessed at https://haymakeracquisition.com/. No audio replay will be available.
About GPM and Arko:
Based in Richmond, VA, GPM was founded in 2003 with 169 stores and has grown through acquisitions to become the 7th largest convenience store chain in the United States, with, following the consummation of the Empire acquisition, 2,930 locations comprised of 1,350 company-operated stores and 1,580 dealer sites to which it supplies fuel, in 33 states and Washington D.C. GPM operates in three segments: retail, which consists of fuel and merchandise sales to retail consumers; wholesale, which supplies fuel to third-party dealers and consignment agents; and GPM Petroleum, which supplies fuel to GPM and its subsidiaries selling fuel (both in the retail and wholesale segments) as well as subwholesalers and bulk purchasers.
Arko is the controlling shareholder of GPM and, as part of the business combination with Haymaker (the “Business Combination”), the shares of Arko will be de-listed from the Tel-Aviv stock exchange. At the closing of the Business Combination with Haymaker, Arko will have no material independent operating activities, income, or net assets, other than its ownership interest in GPM.
About Haymaker Acquisition Corp II:
Haymaker is a $400 million blank check company formed for the purpose of entering into a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. Haymaker’s acquisition and value creation strategy is to identify, acquire and, after its initial business combination, build a company in the consumer, retail, media, or hospitality industries. Haymaker is led by Chief Executive Officer and Executive Chairman Steven J. Heyer, President Andrew R. Heyer, Chief Financial Officer Christopher Bradley, and Senior Vice President Joseph Tonnos. For more information about Haymaker, please visit www.haymakeracquisition.com.
About MSD Partners, L.P.
MSD Partners, L.P., an SEC-registered investment adviser located in New York, was formed in 2009 by the principals of MSD Capital, L.P. to enable a select group of investors to invest in strategies that were developed by MSD Capital. MSD Capital was established in 1998 to exclusively manage the capital of Michael Dell and his family. MSD Partners utilizes a multi-disciplinary investment strategy focused on maximizing long-term capital appreciation by making investments across the globe in the equities of public and private companies, credit, real estate and other asset classes and securities. For further information about MSD Partners, please see www.msdpartners.com.