An unsolicited offer from an unidentified prospective buyer of TravelCenters of America is getting a thumbs-down from TA’s directors, advising shareholders to approve BP’s bid for the truck stop operator.
In the company’s proxy filing Wednesday with the Securities and Exchange Commission, which among other things spells out various items required for shareholder approval, TA (NASDAQ: TA) revealed that it received a bid for the company on March 14. The identity of Party G was not disclosed, only describing it as a “publicly traded fuel supplier and convenience store operator.”
Depending on how “fuel supplier and convenience store operator” is defined, the universe of companies that would fit that category is anywhere from tiny to somewhat more significant. Only a few companies that are fuel suppliers and convenience store operators that aren’t also refiners are publicly traded. Among them are Casey’s General Stores (NASDAQ: CASY) and 7-Eleven, which is owned by a Japanese parent but has an American Depositary Receipt that trades in the U.S. as Seven and I Holdings ADR (OTC: SVNDY).
If the definition includes fuel suppliers that also are refiners, the universe expands to such companies as Marathon Petroleum and Phillips 66. There was no mention of refiners in the TA proxy.
Although the face value of the Party G bid at $92 per share exceeds the BP (NYSE: BP) bid of $86 per share, TA’s directors are recommending that shareholders reject the ostensibly higher offer.
The proxy said the directors met Wednesday to discuss the Party G proposal and voted to recommend its rejection. Among the reasons for their decision, despite the higher offer, were:
- Party G’s proposal needs “significant third-party financing, and there was no firm commitment from a potential financing source to provide such financing.”
- The need for Party G to have 30 days to complete due diligence before entering into a final agreement.
- The failure of Party G to provide draft agreements to TA.
- Unsettled questions about antitrust issues under the Hart-Scott-Rodino Act, which governs much of antitrust law.
- Issues with Party G’s credit rating and “financial condition.”
According to the proxy, the board’s vote to reject Party G was unanimous.
That fact did not stop the stock of TA from rising Thursday. TA stock has been trading at slightly less than the sale price of $86 per share since the planned acquisition was announced in mid-February. At just before 11 a.m. EDT, TA’s stock had moved up about 2% to around $86 per share, the price BP is planning on paying for TA.
Companies that are to be acquired often trade at slightly less than the acquisition price in that period between the announcement of the deal and its closing. That gap is viewed as a small insurance premium in case the deal does not close.
If the TA-BP deal were to fall apart, the agreement between the two companies requires either party to pay a $90.9 million termination fee, according to the proxy.
The proxy statement has a lengthy recap of the timeline that led to the BP offer to buy TA. Meetings between BP and TA were held as long ago as 2021, and a confidentiality agreement between the two companies was signed in August of that year.
It is also revealed in the proxy that while several other companies in the oil and gas business did study whether to make a bid for TA, only one other bid was actually on the table when the directors voted to decide who would buy the company. That other offer was from unidentified Party E. But the Party E offer was for $68 per share, far less than the BP offer.
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