Applegreen, the number one motorway service area operator in Ireland, is to become the leading operator of motorway service areas in the UK, after agreeing to acquire a majority holding in Welcome Break, the UK’s largest roadside services operator.
The company this morning said it had entered into an agreement with NIBC European Infrastructure Fund I C.V. to acquire its entire 55.02% holding in Welcome Break for a cash consideration of approximately €361.8m (£321.6m). Welcome Break generated revenues of £723.4m and adjusted EBITDA of £66.4m in the year to January 2018. The deal has been described as a “transformational transaction in the UK motorway service area sector”.
In addition, Applegreen has entered into a separate conditional agreement with Welcome Break Investors II LP a limited partnership managed by Arjun Infrastructure Partners (“AIP”). AIP also manages the sole other current shareholder of Welcome Break with a current holding of approximately 45% (the “AIP Agreement”).
Applegreen said the deal significantly broadened its motorway service area network, and fulfilled a strategic objective since IPO of achieving critical mass in the large and stable UK market while deepening the group’s exposure to non-fuel food and beverage revenue
Welcome Break currently comprises a diversified, well invested and stable cash flow generating portfolio of 24 motorway service areas (“MSA’s”), two Trunk Road Service Areas (“TRSAs”) and 29 hotels across 35 locations in the United Kingdom.
Its sites are open 24 hours a day, 365 days a year and attract c.85m motorway customers per annum.
Formed in 1959, Welcome Break has over 55 years’ experience in the sector and 5,000 plus employees operating food and retail brands such as Starbucks, KFC, Burger King, Subway, Waitrose, Harry Ramsden’s and WH Smith. Welcome Break also operates 22 Days Inn and seven Ramada hotels across the UK motorway network.
The deal introduces new brand partners including Starbucks, KFC, Waitrose, Pizza Express and Pret-A-Manger to Applegreen and gives it the opportunity to leverage the Welcome Break brand.
The transaction, which constitutes a reverse takeover, will be financed by a new debt facility of €300m and a proposed equity fundraising of a minimum of €100m.
Bob Etchingham, chief executive of Applegreen 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 c85 million customers who visit Welcome Break each year the very best experience on UK motorways.”
