Company of the Month August 2018: Applegreen makes bold expansion in the UK

Pictured: Bob Etchingham, CEO, Applegreen

Applegreen’s acquisition strategy ramps up with the €360 million purchase of a controlling stake in Welcome Break, Britain’s second-largest motorway service station operator.

August 2018 saw Applegreen’s acquire a controlling stake in Welcome Break, Britain’s second-largest motorway service station operator for €360 million, while continuing US expansion.

From its humble beginnings with the opening of their first service station in Ballyfermot, Co Dublin, 26 years ago, Applegreen has consistently demonstrated a track record of high growth in challenging consumer markets. Ever since its IPO on the AIM of London Stock Exchange and ESM on the Irish Stock Exchange in 2015, the Group has used the funds raised (€91.7 million) to accelerate growth across the markets in which it operates and further expand. 

Bob Etchingham, CEO, Applegreen

Disciplined investment

The Group has a disciplined investment and execution strategy and continues to exploit high growth/high margin convenience lines to generate strong returns into the future. Applegreen’s growth strategy is also focused on acquiring and developing new sites in the markets in which it operates and upgrading and rebranding its existing sites. Developing a Greenfield site into a motorway service area can take up to ten years, so this acquisition fast forwards Applegreen’s UK business significantly. 

CEO Bob Etchingham has overseen a rebranding from Petrogras to Applegreen, and the fuel retailer’s move in forecourt food offerings, morphing from an oil man to a convenience retailer in the process. This latest move may see him add ‘hotelier’ to his CV as Applegreen moves to take over 24 motorway service areas, two trunk-road service areas and 29 hotels. 

Welcome Break motorway services off the M4 in West Berkshire, UK.

Welcome Break sees 85 million customers every year and is home to Europe’s biggest Starbucks franchise across its network. Service stations are also home to hotel brands including Days Inn and Ramada, a model which will be examined for introduction to the Irish market. 

Currently the acquisition sees Applegreen take a 50.01% stake, with an option to buy out minority shareholder Arjun Infrastructure Partners over the next 10 years. Welcome Break will bring a share of €812 million (stg£723 million) a year in revenues with it. To fund the deal, Applegreen is raising €140 million in equity and it is reported that Applegreen co-founders Bob Etchingham and Joe Barrett investing €30 million in cash. 

The American dream

Meanwhile investment in the USA continues apace with a further seven convenience stores and a wholesale fuels distribution business acquired from Carolina Convenience Corp. added to its Stateside portfolio in the same week, The US investment model is not so capital intensive, with property partners including capital-light Getty putting up the money for the sites, and Applegreen operating the business in partnership with brands such as 7-Eleven.

Applegreen has also agreed a deal to lease a network of 43 petrol filling station sites in Florida from CrossAmerica Partners (CAP), which is expected to complete, subject to a number of conditions, in the third quarter of this year.

Prior to the most recent acquisitions the Group’s network currently encompasses 274 forecourt sites and convenience stores, employing 3,400 people, across Ireland and the UK and 68 locations in the US. Last summer saw the acquisition of 42 sites in South Carolina – a mixture of 34 filling stations and 8 standalone Burger King stores. At the time Bob Etchingham reflected on the importance of a global appetites he foresaw “growth opportunities plateau in Ireland” over the coming years.