Orlando, Fla. — The parent company of the world’s largest convenience brand is swallowing another U.S. gas station chain.
Seven & I Holdings Co. is purchasing all 3,900 Speedway gas stations from Marathon Petroleum for $21 billion cash.
“It could certainly shake up the retail gas and convenient store industry,” says Patrick De Haan, lead petroleum analyst at GasBudy.
With the acquisition of Speedway, Seven & I Holdings’ 7-Eleven will grow its chain to approximately 14,000 stores in North America.
De Haan tells WDBO it will be interesting to see if 7-Eleven will adopt Speedway’s ‘price cycling’ behavior to turn a profit in Marathon’s base in the Midwest and East Coast.
“Speedway is constantly adjusting prices to stay ahead of the competition and will undercut competition fiercely.”
But when they erode their profit margin, De Haan says Speedway will—out of the blue—raise prices by 30 or even 40 cents before repeating the 1-2 week cycle.
Marathon, the largest independent refiner in the U.S., is set to pocket $16.5 billion after-tax if the deal closes in early 2021.
The company was looking to divest its hold on Speedway months ago and had plans to sell the chain, but naturally, the novel coronavirus put negotiations on hold.
The oil industry is currently on a long road to recovery as demand for fuel dropped about 20% from March 2019 to March 2020 at the start of the pandemic, according to a GasBuddy study.
Speedway is expected to completely assume the 7-Eleven brand except for the sale of its Marathon gasoline.