Applegreen chiefs and Blackstone plot €694m bid for fuel retailer

Fuel forecourt retailer Applegreen said on Thursday its co-founders and a part of the Blackstone US private equity group have come together to bid to take the company off the stock market in a deal that would value it at almost €694 million.

The founders, chief executive Robert Etchingham and chief operations officer Joseph Barrett, own 41.3 per cent of the company through a vehicle called B&J Holdings. They will remain "significant equity" investors should the proposed offer – priced at €5.75 per share – be accepted by remaining shareholders, Applegreen said in a statement.

The move to take Applegreen private comes as the business grapples with Covid-19, Brexit, and an accelerating shift by motorists towards electric vehicles. It is understood that the initial bid approach was made in August.

“The Independent Directors of the Board of Applegreen confirms that it is in advanced discussions with a consortium including B&J Holdings Ltd and Blackstone Infrastructure Partners in relation to a possible cash offer for the company at a price of €5.75 per share,” Applegreen said.

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“Should the transaction proceed, B&J Holdings Ltd would retain a significant equity stake in the consortium and Robert Etchingham and Joseph Barrett would maintain their current management positions as CEO and COO respectively within the business.”

Shares

The offer, which has yet to be formally tabled, represents a 48.2 per cent premium to Applegreen’s €3.88 closing share price on Wednesday. Shares in the company soared as high as €5.60 in Dublin trading.

“This seems to be an elegant solution for Applegreen and shareholders, as public markets weren’t reflecting the real value of the business, which proved extremely resilient even during the worst of Covid-19,” said Allan Smylie, an analyst with stockbrokers Davy, who has issued a note to clients in October placing a €6.50 price target on the stock.

Mr Etchingham, a Wexford native who turns 67 next week, founded the business in 1992 with one station in Ballyfermot in west Dublin, having spent the previous decade working for Esso. Mr Barrett (54) joined him the following year.

Applegreen raised €92 million through an initial public offering (IPO) in June 2015, in a deal that also saw €21.7 million of stock placed by Mr Etchingham and Mr Barrett at the time.

The duo’s stake declined over the following years as they sold more of their shares on the market and Applegreen raised a further €222 million through two share placings to fund expansion. The group’s number of sites has trebled since the flotation to total 559 at the end of June, including 204 locations in Ireland, 164 in the UK, and 191 in the US, a market it entered in 2014.

Covid-19

In September, Applegreen said it was part of a consortium that had been awarded a contract to develop 27 motorway service areas along the 917km New York State Thruway.

While the group’s sales volumes slumped by 57 per cent at the height of Covid-19 lockdowns internationally in April, they had recovered significantly to be off 29 per cent by the end of June, according to the most recent financial update.

Revenues for the first half of the year dropped 27 per cent to €1.1 billion from the same period last year, which resulted in earnings before interest, tax, depreciation and amortisation declining to €25.3 million from €58.9 million.

Mr Barrett predicted in an interview last month that 40 per cent of new cars bought in 2040 will be electric, which, he said, offers Applegreen further opportunities to push its retail and ancillary offerings. The company currently charges 1,500 electric vehicles daily across its locations, with an average dwell time for customers of about 25 minutes.

Applegreen said in its statement on Thursday that independent directors, led by chairman Danny Kitchen, came together to evaluate the initial approach from the bidding consortium and excluded the two co-founders and chief financial officer Niall Dolan.

The independent board, advised by corporate financiers in Goodbody Stockbrokers, intends to “recommend unanimously that Applegreen shareholders accept the possible cash offer”, it said.