Irish forecourt operator Applegreen is set to acquire a majority stake in the Welcome Break service station group, one of the three dominant owners of UK motorway service areas.
Applegreen has agreed a deal with NIBC European Infrastructure Fund to buy a 55.02% stake in Welcome Break through investment in Appia Group Ltd for a cash sum of €361.8m (£276.5m).
The transaction will be financed by a new debt facility of €300m (£229.2m) and a proposed equity fundraising of a minimum of €100m (£0.76m).
Welcome Break has a portfolio of 24 motorway service areas, two trunk road service areas and 29 hotels across 35 locations in the UK.
Commenting on the agreement, Applegreen ceo Bob Etchingham said: “Welcome Break is a fantastic business, it has led the way in providing the very best food and beverage facilities on the UK motorways. We were attracted to Welcome Break because of the strength of its franchise, the excellent management team and the committed staff at each of its 35 locations. We look forward to continuing to grow the Welcome Break business and to offering the 85 million customers who visit Welcome Break each year the very best experience on UK motorways.”
Welcome Break chairman and md of NIBC Infrastructure Partners Darren Kyte said: “This is a transformational transaction in the UK MSA sector, and I am sure that the combination of the Applegreen Service Area operations in the UK with those of Welcome Break, and combined management capabilities will help build further upon the consistent and strong earnings growth seen by both businesses over the past decade.”
Welcome Break employs more than 5,000 people and operates food and retail brands such as Starbucks, KFC, Burger King, Subway, Waitrose, Harry Ramsden’s and WH Smith within its service stations. The Welcome Break Group also operates 22 Days Inn and seven Ramada hotels across the UK motorway network.
In addition, Applegreen has also entered into a separate conditional agreement with Welcome Break Investors II LP, a limited partnership managed by Arjun Infrastructure Partners (AIP) which holds a 45% stake in the Welcome Break business.
The company said the agreement would give Applegreen ’greater operational influence’ over the Welcome Break group and broaden the company’s motorway service area network.
Under the terms of the AIP agreement, Applegreen will be responsible for Welcome Break’s strategy and operational matters and will share general governance rights with AIP including equal board representation.