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Murphy USA (MUSA) Inks $645M Acquisition Deal With QuickChek

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Zacks Equity Research
·3 min read
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Murphy USA Inc. MUSA has reached an agreement to acquire QuickChek Corporation in an all-cash deal value of $645 million. The purchase amount comprises estimated tax benefits worth $20 million for a net after-tax purchase price of $625 million. The company will pay for the transaction with the help of cash on hand, prevailing credit facilities and new debt. Also, Murphy USA took committed funding from the Royal Bank of Canada.

About QuickChek

With 157 stores located across Central and Northern New Jersey and the New York metro locale, QuickChek is a family-owned chain that offers a best-in-class food and beverage model with a strong regional brand and mostly caters to higher customer traffic. It provides fast-service restaurant style food besides convenience items.

Rationale Behind the Deal

Earlier in October, Murphy USAplanned a revised capital allocation strategy that focuses on bettering its food and beverage offer at the existing and upcoming locations. Per management, the acquisition is in sync with the company’s strategy to improve its capital allocation.

The company’s president and CEO Andrew Clyde states that “This transaction greatly accelerates those efforts and benefits, and is expected to provide reverse synergies across our network, while enhancing future returns on new stores. The transaction is also expected to create direct synergies that leverage our enterprise scale and our distinctive capabilities in fuel, tobacco and loyalty.”

Upon fulfilling the pending approvals and customary conditions, the transaction is slated to be closed by the first quarter of 2021. This investment is estimated to boost Murphy USA’s earnings in 2022.

Company Summary

Murphy USA is a leading independent retailer of motor fuel and convenience merchandise in the United States. This El Dorado, AR-based company attained its current status following the 2013 spin-off of Murphy Oil Corporation’s downstream business into a separate, independent and publicly-traded entity.

The company markets refined products through a chain of retail stations almost all of which are located near a Walmart supercenter, primarily in the Southeast, Southwest and Midwest United States.

Zacks Rank & Key Picks

Murphy USA currently has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space are Transocean Ltd. RIG, Noble Corporation NE and Antero Midstream Corporation AM, each presently holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Transocean Ltd. (RIG) : Free Stock Analysis Report
 
Antero Midstream Corporation (AM) : Free Stock Analysis Report
 
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Murphy USA Inc. (MUSA) : Free Stock Analysis Report
 
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