By Geoff Percival
Irish forecourt operator Applegreen is continuing to target expansion opportunities in the UK and the US after agreeing terms to buy a majority stake in British motorway services station operator Welcome Break for close to €362m.
Applegreen has described the deal — which is the company’s largest to date and requires shareholder approval — as “transformational” and will fund it by way of a €300m debt facility and the raising of at least €100m in new equity.
The company’s shares have been suspended, as the transaction is classed as a reverse takeover under stock exchange rules, and will resume trading on receipt of a new admission expected next month.
Welcome Break is one of the top three owners of motorway service stations in the UK, with 24 such facilities around Britain and revenues of over €812m.
Applegreen will initially take a 55% stake in Welcome Break, acquiring it from Dutch investment bank NIBC.
Its majority stake will ultimately be just over 50% with London-based investment firm Arjun Infrastructure Partners owning the remainder and investing €80m to pay off junior debt and significantly deleverage Welcome Break.
“These types of opportunities don’t come around that often. The motorway services area is where the growth is in the UK and this deal is transformational in terms of us accelerating our strategy,” said Applegreen chief financial officer Niall Dolan.
Applegreen already has close to 100 filling station forecourt sites in the UK and will continue to look for expansion opportunities on that side of the business.
Regarding the motorway services sector, the company already has a pipeline of UK-based development sites which it will use to grow the Welcome Break business.
Mr Dolan also said the company has further ambitions to grow its core business in the US, where it operates 114 filling stations on a lease basis.
In June, Applegreen signed a long-term agreement, with property lessor CrossAmerica Partners, to lease 43 petrol stations in Florida.
Mr Dolan said the US is still a “very attractive” market for Applegreen, with “plenty of opportunity”.