Applegreen is pushing further into the UK after a 'transformational' buyout
The Dublin group has acquired a majority stake in service area operator Welcome Break.
IRISH PETROL FORECOURT retailer Applegreen is expanding further in the UK after acquiring a majority stake in a 50-year-old motorway service area operator.
The Dublin-based group announced that it has entered into an agreement to acquire a 55% shareholding in Welcome Break, which operates 26 service areas and 29 hotels in the UK.
The deal is estimated to be worth over €360 million. It will be funded through a €300 million debt facility and subsequent equity fundraising round.
Founded in 1959, Welcome Break’s service areas are open around the clock, every day of the year, and attract around 85 million customers each year, according to a statement from Applegreen.
The UK group employs 5,000 people and has partnered with several well-known food and retail brands like Starbucks, KFC, Burger King, Subway and WH Smith.
‘Transformational’
Explaining the rationale for the purchase, Applegreen’s board said it believes the acquisition will be “transformational”. It forecast that the deal will result in Applegreen becoming a leading motorway service area operator in the UK as well as Ireland.
“The transaction will provide the group with access to new partners which currently work with Welcome Break,” it said.
In a briefing note, Investec economist Ronan Dunphy said the transaction is “rightly described as transformational and will fulfil a strategic objective since IPO of achieving critical mass in the UK and expanding the group’s exposure to non-fuel earnings”.
He noted that trading in Applegreen shares will be suspended in London and Dublin until an admission document is published in September “as the transaction constitutes a reverse takeover under stock exchange rules”.
Founded in 1992, Applegreen runs petrol forecourt retail units in Ireland, the UK and the USA. It operates 342 forecourts and employs around 4,900 people.
It has signed strategic partnerships with several well-known brands including Costa Coffee, Greggs, Burger King and Subway. It also operators its own café brand called Bakewell.
According to Applegreen’s annual report, the group recorded sales of over €1.4 billion in 2017, an increase of over 21% on 2016′s tally. Its profit before tax grew 17% to €24 million during the year.
