FTC approves $1.8B Pilot Travel Centers-Flying J merger
Thursday July 01, 2010
New combined firm will operate centers in 43 states
Almost a year after announcing their intent to merge, the Federal Trade Commission approved a $1.8 billion merger between Pilot Travel Centers and competitor Flying J. Inc., a move that expands Pilot's position as the market share leader in the travel center industry.
The merged companies will have more than 550 interstate travel centers and plazas in 43 states and six Canadian provinces, with more than 20,000 employees.
Headquarters for the combined companies will be in Knoxville, with some Flying J corporate jobs coming to Knoxville.
"We are now one great company, two great brands," Pilot Flying J President and CEO Jimmy Haslam said in a statement. "Our new organization is a combination of two of the best-known brands in the travel center industry, both with strong family histories and shared values."
This merger creates the largest travel center operator in North America and is headquartered in Knoxville. Starting today, Pilot Travel Centers now is Pilot Flying J.
In the end, a home-grown business that began in 1958 with one family-owned Pilot gas station in Gate City, Va., has morphed into an international corporation with $20 billion in annual revenue, 550 travel centers and plazas in 43 states and six Canadian provinces, with more than 20,000 employees.
Pilot now ranks among the 10 largest U.S. privately owned companies.
Flying J brings to the merger 305 travel centers primarily located in western states. Pilot achieves with one transaction what it was taking the company nearly 10 years to reach as it has grown by 10 to 15 company-owned travel centers and about 30 dealer-owned locations a year.
"This increases the size of the company by 50 percent," Haslam said. "We will go from one location in Canada to about 60 locations."
Haslam said Pilot Flying J will have approximately 25 percent of the U.S.-Canada diesel market share. Love's, which is acquiring 26 Pilot Flying J locations that the FTC is requiring, is second in market share and Travel Centers of America is third.
Haslam noted that the newly merged company's size and scale can yield savings in the purchase of supplies like diesel and gasoline. He said the company will continue to focus on being a low cost supplier in the industry.
"You obtain substantial scale overnight," Haslam said. "We will have multiple suppliers. We source a tremendous amount of product (petroleum) from the Gulf Coast and pipe it in. That's where your size comes in handy."
Now that the merger is complete, Haslam is ready to begin combining operations. He said $150 million will be spent to update Flying J locations. Flying J restaurants will be converted to a national brand like Denny's and point of sale systems will be upgraded and integrated.
In the merger, about 35 Flying J corporate employees will relocate to Pilot's corporate office building in Knoxville that fittingly fronts Interstate 40-75. Pilot has acquired additional buildings in the business park where the corporate offices are to handle the company's growing staff and operations. Immediately, the merger has created two operating divisions.
Despite Pilot's tremendous growth through the years and its dominant position in the travel center industry, Haslam said Pilot Flying J will not convert to a public company. Pilot toyed with the idea in the late 1980s, coming close to becoming publicly traded before canceling a public offer.
He said markets tend to punish companies with earnings that are unpredictable, such as ones related to the petroleum industry that rely on volatile prices for their products.
"We like being a private company. There's no reason to go public because we have access to capital," he said. "It's far easier to be a private company."
Source: Knoxville News Sentinel
