TravelCenters of America LLC (NASDAQ: TA) is having a great start to the trading session this morning in the pre-market hours, and for good reason. The company announced that it has entered into a definitive agreement to sell assets, exciting investors and sending the stock screaming for the top. Today, we’ll talk about:
- The asset sale;
- what we’re seeing from TA stock as a result; and
- what we’ll be watching for ahead.
TA Heads For The Top On Asset Sale
As mentioned above, TravelCenters of America is having an incredibly strong start to the trading session this morning after announcing an asset sale. In a press release issued early this morning, the company said that it has entered into a definitive agreement to sell its Minit Mart convenience store business. According to the announcement, TA will sell the business to EG Group for a cost of approximately $330.8 million.
TA said that the price mentioned is subject to adjustments of final net working capital and certain prorations at closing. The sale includes 225 standalone convenience stores as well as certain related assets. This sale is key as it not only brings a massive amount of revenue through the doors, but it also allows the company to exit the standalone convenience store business and focus on its core travel center business. It is expected that the sale will be completed in the fourth quarter of this year. In a statement, Andy Rebholz, CEO at TA, had the following to offer:
When the sale of this business is completed, TA will exit the standalone convenience store business; allowing us to increase our focus on our core travel center operation, which we believe is a business where we have many competitive advantages. We plan to use the net proceeds from this sale to reduce leverage and/or invest in travel center growth initiatives. We expect some of these growth initiatives may include expanding our industry leading truck service program and growing our nationwide network of travel centers, including investing in our recently announced TA Express travel center format and pursuing new franchising opportunities.
Our standalone convenience stores have been a part of our business for nearly five years. We want to thank our corporate and field employees for their hard work and commitment to our customers throughout the period we have operated these convenience stores.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to dive into the market is that the news leads to moves. In the case of TravelCenters of America, the news proved to be overwhelmingly positive. First and foremost, the deal brings more than $330 million through the door for the company. Perhaps more importantly, it allows the company to focus on its core business. So, it comes as no surprise to see that excited investors are sending the stock on a run for the top. As is normally the case, our partners at Trade Ideas were the first to alert us to the gains. Currently (9:08), TA is trading at $5.90 per share after a gain of $1.55 per share or 35.63% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on TA. In particular, we’re interested in following the story surrounding the asset sale as it is still subject to customary closing conditions. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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