Analyst Weighs In On CST Brands Acquisition of Nice N Easy

niceEASYLogoCST could leverage Nice N Easy’s strength in foodservice and grocery.

CST Brands Inc. announced yesterday that it is acquiring the convenience store assets, franchisor rights and associated trademarks of Nice N Easy Grocery Shoppes. NRC Realty & Capital Advisors LLC served as the exclusive financial advisor.

The deal had been set in motion by Nice N Easy’s founder, the late John MacDougall, before his death earlier this summer.

Based in Canastota, N.Y., Nice N Easy operates 77 corporate and franchise stores in Central New York. The company operations include 33 company-operated stores along with 44 franchise locations.

“Our stores across the U.S. and Canada share a lot in common with Nice N Easy Grocery Shoppes, making this a great match culturally and a prime opportunity for CST Brands to enter into new markets,” said Kim Bowers, chairman and CEO of CST Brands. “Both Nice N Easy and CST Brands are committed to great people, loyal customers and strong community ties, and we look forward to delighting more customers every day together.”

Wells Fargo Securities LLC weighed in on transaction.

“We understand CST worked with NRC through the bidding process for the past couple months and given the strong operating synergies CST expects through the proximity to CST’s Canada store base, this transaction would have been done with or without the Lehigh Gas Partners (LGP) transaction,” noted Bonnie Herzog, managing director, Beverage, Tobacco & Convenience Store Research, Wells Fargo Securities LLC, referencing the recent announcement that CST Brands was acquiring the general partner of Lehigh Gas Partners and all the associated Incentive Distribution Rights (IDRs) of LGP.

Nice N Easy

Convenience Store Decisions honored MacDougall and the entire Nice N Easy team with the 2009 Convenience Store Chain of the Year award. Pictured is the November 2009 issue of CSD featuring Nice N Easy on the cover.

“Following its deal with LGP, which greatly increased CST’s presence in the Eastern U.S., we believe the ‘tuck-in’ transaction with Nice N Easy, which is expected to close in Q4 and be accretive immediately upon close, offers another means for CST to further extend its geographic footprint while capitalizing on the strong brand and reputation of Nice N Easy stores,” added Herzog. “Further, we believe there may ultimately be an opportunity for LGP to purchase inventory from these stores once both deals close. Bottom line—we are encouraged by this deal and believe CST will continue to be a strong consolidator as it expands further and leverages its growing store base to drive top-line growth and operating efficiencies.”

Wells Fargo further predicted that Nice N Easy’s strength in foodservice and grocery should offer key best practices for CST’s existing store base. “Nice N Easy enjoys a strong reputation for foodservice through its Easy Street Eatery concept and its solid grocery offerings. Given the somewhat soft same-store sales growth that CST has had, we believe that this transaction could allow CST to leverage some best practices from Nice N Easy and improve its merchandise and foodservice offerings. CST plans to keep the current store banner, and we think CST could expand the Nice N Easy store base further to leverage its strong local reputation,” noted Herzog.

“Given that CST does not currently have any franchise locations in the U.S., we believe this may be an opportunity for the company to gain knowledge and insight and expand further through franchised stores,” Herzog further predicted.

Wells Fargo expects the c-store industry to see more acquisitions, such as this one in the near future. “ As we have consistently stated, we believe there is a long runway of consolidation to occur in the c-store industry, and given the recent transactions CST has pursued, we expect more to come as CST further extends its geographic footprint,” Herzog said.

For more information on the acquisition, visit http://www.cstoredecisions.com/2014/08/20/cst-brands-acquire-nice-n-easy-grocery-shoppes/#_

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