I’ve owned shares of Casey’s General Stores (CASY), a domestic operator of gas stations with convenience stores, for a long time. My initial idea was that for the big oil conglomerates, this part of their business was an afterthought. Not a good afterthought, either. It was/is a mature business, so it’s not glamorous and certainly not a path to top management Having the conglomerate name on the station also makes it a bigger target for consumer anger when oil prices are high.
So consolidation by smart operators in a mature, fragmenting industry was my initial idea.
A while ago, I started thinking that independent gas station chains also have a chance to redefine themselves as the go-to places to charge your EV–something I suspect the big oil companies should also do, but will be loathe to, especially in the US. In fact, Marathon Oil sold its Roadway chain to Seven & i in 2021.
Seven & i
Seven & i was originally a moderately-priced, forward-thinking (for Japan, anyway) domestic retailer who bought the 7-Eleven franchise for Japan, which it turned into the largest and most successful of the “conbini” convenience store chains there. Ultimately, it acquired the failing US parent, as well–and began to reinvigorate and expand it.
Seven & i has been under attack by foreign investors who want the company to break itself up, on the standard idea that the sum of the individual parts will far exceed the market cap of the whole.
To complicate matters, Alimentation Couche-Tard (ATD.TO), the second-largest operator of convenience stores in North America (the Circle K brand), has just made a bid to buy Seven & i, presumably to keep the North American assets and sell off the rest.
my take
Wall Street seems to me to be viewing this as consolidation aimed at retaining critical mass that’s typical in a declining industry. I think that’s right, as far as it goes. I think it’s also possible, though, that operators view their locations as having a second life as EV charging stations.