CORPUS CHRISTI, Texas -- Less than a week after one convenience store chain completed its initial public offering (IPO) of stock, a second initiated the process to do the same. Susser Holdings Corp., Corpus Christi, Texas, filed with regulators on Friday to raise up to $115 million in an IPO of common stock.
Susser officials could not discuss the IPO because they have entered into a quiet period, as required by law. But the move comes five months after Susser Holdings, operator of 319 c-stores in Texas and Oklahoma, entered into an investment agreement [image-nocss] with Wellspring Capital Management LLC, a New York City-based private equity firm that focuses on acquiring companies where it can contribute management expertise, financial strategies and capital. Thus, all indications show Susser Holdings is a company preparing for growth.
At the time of the deal with Wellspring, Susser president and CEO Sam Susser said the private-equity firm has a long history of investing in retail and consumer companies to foster growth and expansion over the long term. Thiswill provide a tremendous platform for Susser Holdings' next stage of growth.
The initial IPO filing did not state how many shares the company will sell or the expected price of the shares. In making its case for the IPO, the company cited its differentiated retail strategy as a strong point.
We believe our retail strategy, which emphasizes merchandising, foodservice and technology, is superior to our competition, the document states. We are less dependent on cigarettes and motor fuel than the industry as we focus our in-store merchandise mix on attractive product categories, such as beverages and [our proprietary] Laredo Taco Co. foodservice. Our new store model is almost twice the size of the typical convenience store and features a comprehensive convenience merchandise selection of approximately 2,800 SKUs.
The statement also notes that Susser Holdings, which does business under the Circle K banner, has increased in retail store count by 75% over the past five years and opened 52 of its large-format stores since 1999.
And the company plans to continue that growth following the IPO. We believe that there is significant opportunity to increase our sales and profitabilitythrough growing our store base in existing and contiguous markets both organically and through strategic acquisitions, the document states. We expect to use a portion of the net proceeds from this offering as growth capital to pursue this growth strategy.
The document continues, We have identified expansion opportunities in all of our existing markets and throughout the Southwest region. We intend to open 16 to 20 new stores per year in fiscal 2006 and 2007 in our existing markets. [And] we believe there will continue to be meaningful opportunities to grow our store base in the future.
The company also plans to use the proceeds from the IPO to grow its wholesale distribution network by 25 to 35 dealers in the next two years, as well as redeem notes, repay some borrowings under its revolving credit facility, and for general corporate purposes. It plans to have its shares traded on the Nasdaq under the symbol SUSS.
Susser's filing comes three days after Franklin, Tenn.-based Delek US Holdings Inc. announced the closing of its IPO of a total of 11.5 million shares of its common stock at $16 per share. The IPO resulted in net proceeds to the company of approximately $172 million. The company said it intends to use it for repayment of debt to its affiliates, future acquisitions, capital improvements to its refinery and retail fuel and c-stores, new construction and general corporate purposes.
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