When Speedway Met Hess
How two iconic brands came together to form a retail powerhouse
When Hess Corp. filed for a tax-free spinoff of its retail business in January, could deal makers ever have imagined that the convenience store brand as they knew it would completely cease to exist in just three short years?
The iconic bold green-and-white logo will soon make way for another icon, albeit a Midwestern one: Speedway’s red-and-white logo.
In a move that gives Marathon Petroleum Corp.’s Speedway LLC ownership of all Hess retail locations, transport operations and shipper history on various pipelines for a total consideration of $2.87 billion, the acquisition announced at the end of May represents a strategic move by Speedway to push beyond its Midwest roots.
“This acquisition will be transformative for MPC and Speedway as it will significantly expand our retail presence from nine to 23 states through these premier Hess locations throughout the East Coast and Southeast,” says MPC president and CEO Gary Heminger.
Today, Hess is a global integrated energy company and a leading convenience store retailer on the East Coast. But in March 2013, the company announced that it would divest its retail operations and focus on exploration and production. It never took the retail arm off the sale block, not even in January, when it officially filed to spin off the retailing network.
Enter Speedway. Back in 2013, Heminger commented confidently on Hess’ retail assets. “They have one of the best-looking systems on the East Coast,” he said during an October 2013 conference call. “It would be an excellent fit with Speedway.”
Following the acquisition, Heminger also was effusive. “This [acquisition] really fits us like a glove and is going to tee us up for long-term growth,” he said on a conference call about the deal.
Tony Kenney, president of Speedway, says that the deal will make the retailer the largest company-owned and -operated c-store chain in the country based on revenue, and the second largest by store count.
Bye to a Brand
The acquisition will no doubt be an adjustment for the many loyal Hess customers up and down the Eastern Seaboard. The brand enjoys sustained popularity on social media, with almost 378,000 friends on Facebook alone. It’s also proven itself a hub for the on-the-go eater. Following the sale, concern over the fate of Hess’ collectible toy trucks that roll out anew each Christmas sparked the need for a completely separate press release affirming that the toy truck for 2014 will indeed be sold this holiday season.
But despite all that goodwill, all Hess retail locations will be completely rebranded within three years. Speedway’s leadership structure will remain in place, and Speedway’s headquarters will stay in Enon, Ohio.
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