Acquisition

12 Months Ended

Dec. 31, 2024

Acquisition

Acquisition

Note 3. Acquisitions

Asset Acquisitions

Acquisitions of Terminals from Gulf Oil LLC and ExxonMobil Oil Corporation—On April 9, 2024, the Partnership acquired four refined-product terminals from Gulf Oil Limited Partnership (“Gulf Oil”) which are located in Chelsea, MA, New Haven, CT, Linden, NJ and Woodbury, NJ, pursuant to a purchase agreement initially entered into on December 15, 2022 and subsequently amended and restated on February 23, 2024. On November 1, 2024, the Partnership acquired one liquid energy terminal in East Providence, Rhode Island from ExxonMobil Oil Corporation (“ExxonMobil”). The combined acquisition price was approximately $215.1 million, excluding inventory acquired from Gulf Oil and ExxonMobil. The Partnership financed these transactions with borrowings under its revolving credit facility.

Upon an acquisition, the Partnership first determines whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets in order to determine whether the acquisition should be accounted for as an asset acquisition. If the threshold is not substantially met, the Partnership then determines whether the acquisition meets the definition of a business (i.e., whether it includes, at a minimum, an input and a substantive process that together significantly contributes to the ability to create outputs).

Specific to the acquisition of these terminals, consideration was given to the exception principle pertaining to the real estate assets acquired of real property, personal property and construction in progress and whether these assets should be considered a group of similar assets. The personal property and construction in progress assets cannot be removed from the real property without significant cost (i.e., disassembly) and diminution in both utility and fair value to both the real property and personal property. Additionally, the real property and personal property have similar risk characteristics since the land and terminal equipment are both used in the process of blending, storing and transporting petroleum products. The real property and personal property operate as a combined unit of account in order for the Partnership to achieve a desired economic return from these terminals. The Partnership also considered and concluded that the nature of these terminals and the different geographic regions where these terminals reside do not rise to separate risks based on how these assets operate in the marketplace.

As a result of its analysis, the Partnership concluded the acquisitions of these terminals did not meet the criteria of a business combination pursuant to ASC 805 and therefore were accounted for as asset acquisitions. The purchase price in an asset acquisition is allocated to the assets acquired and liabilities assumed based on their relative fair values and no goodwill is recognized. These terminals were allocated to the Wholesale segment.

The following table presents the combined assets acquired and liabilities assumed as of the respective acquisition dates (in thousands):

Assets acquired:
Property and equipment	$	251,539
Right of use assets		350
Intangible assets		6,240
Total assets acquired	$	258,129
Liabilities assumed:
Environmental liabilities	$	(28,850)
Lease liability		(350)
Other liability		(13,844)
Total liabilities assumed	$	(43,044)
Net assets acquired	$	215,085

Property and equipment were recorded at cost based on relative fair value as of the respective acquisition dates using current market values and reproduction or replacement costs of similar assets.

Intangible assets consist of third-party customer relationship contracts and are amortized on a straight-line basis over the respective estimated periods for which the intangible assets will provide economic benefit to the Partnership, which the Partnerships expects to be ten years. Third-party customer relationship contracts were valued using the discounted cash flow method. Significant assumptions used in the valuations include projected cash flows including expected renewals and the discount rate.

In connection with the acquisition, the Partnership incurred acquisition costs of approximately $4.1 million during 2024 which were capitalized as property and equipment in the accompanying balance sheet at December 31, 2024.

Acquisition of Terminals from Motiva Enterprises LLC—On December 21, 2023, the Partnership acquired 25 refined product terminals and related assets from Motiva Enterprises LLC (“Motiva”) which are located along the Atlantic Coast, in the Southeast and in Texas (the “Terminal Facilities”), pursuant to an Asset Purchase Agreement dated November 8, 2023. The Terminal Facilities have an aggregate shell capacity of approximately 8.4 million barrels. The purchase price was approximately $313.2 million, including inventory. The Partnership financed the transaction with borrowings under its revolving credit facility.

Specific to the acquisition of the Terminal Facilities, consideration was given to the exception principle pertaining to the real estate assets acquired of real property and personal property and whether these assets should be considered a group of similar assets. The personal property assets cannot be removed from the real property without significant cost (i.e., disassembly) and diminution in both utility and fair value to both the real property and personal property. Additionally, the real property and personal property have similar risk characteristics since the land and terminal equipment are both used in the process of blending, storing and transporting petroleum products. The real property and personal property operate as a combined unit of account in order for the Partnership to achieve a desired economic return from the Terminal Facilities. The Partnership also considered and concluded that the nature of the Terminal Facilities and the different geographic regions where the Terminal Facilities reside do not rise to separate risks based on how these assets operate in the marketplace.

As a result of its analysis, the Partnership concluded the acquisition of the Terminal Facilities did not meet the criteria of a business combination pursuant to ASC 805 and therefore was accounted for as an asset acquisition. The Terminal Facilities were allocated to the Wholesale segment.

In connection with the acquisition, the Partnership incurred acquisition costs of approximately $4.0 million during 2023 which were capitalized as property and equipment in the accompanying balance sheet at December 31, 2023.

Business Combinations

Acquisition of Tidewater Convenience, Inc.—On September 20, 2022, the Partnership acquired substantially all of the assets of Tidewater in a cash transaction. The acquisition includes 14 company-operated Tidewater convenience stores and 1 fuel site, all located in Virginia. The purchase price was approximately $40.3 million, including inventory. The acquisition was funded with borrowings under the Partnership’s revolving credit facility.

The acquisition was accounted for using the purchase method of accounting in accordance with ASC 805. The Partnership’s financial statements include the results of operations of Tidewater subsequent to the acquisition date.

In connection with the acquisition, the Partnership incurred acquisition costs of approximately $0.6 million during 2022, which are included in selling, general and administrative expenses in the accompanying consolidated statement of operations. Revenues included in the Partnership’s consolidated operating results for Tidewater from September 30, 2022, the acquisition date, through December 31, 2022 amounted to $19.9 million.

Acquisition of Miller Oil Co., Inc.—On February 1, 2022, the Partnership acquired substantially all of the retail motor fuel assets of Miller Oil in a cash transaction. The acquisition includes 21 company-operated Miller’s Neighborhood Market convenience stores and 2 fuel sites that are either owned or leased, including lessee dealer and commissioned agent locations, all located in Virginia, and 34 fuel supply only sites, primarily in Virginia. The purchase price was approximately $60.1 million, including inventory. The acquisition was funded with borrowings under the Partnership’s revolving credit facility.

The acquisition was accounted for using the purchase method of accounting in accordance with ASC 805. The Partnership’s financial statements include the results of operations of Miller Oil subsequent to the acquisition date.

In connection with the acquisition, the Partnership incurred acquisition costs of approximately $1.0 million during 2022, which are included in selling, general and administrative expenses in the accompanying consolidated statement of operations. Revenues included in the Partnership’s consolidated operating results for Miller Oil from February 1, 2022, the acquisition date, through December 31, 2022 amounted to $181.6 million.

Acquisition of Consumers Petroleum of Connecticut Incorporated—On January 25, 2022, the Partnership acquired substantially all of the assets of Consumers Petroleum in a cash transaction. The acquisition includes 26 company-owned Wheels convenience stores and related fuel operations located in Connecticut and 22 fuel-supply only sites located in Connecticut and New York. The purchase price, subject to post-closing adjustments, was approximately $154.7 million, including inventory. The acquisition was funded with borrowings under the Partnership’s revolving credit facility.

The acquisition was accounted for using the purchase method of accounting in accordance with ASC 805. The Partnership’s financial statements include the results of operations of Consumers Petroleum subsequent to the acquisition date.

In connection with the acquisition, the Partnership incurred acquisition costs of approximately $1.2 million for 2022, which are included in selling, general and administrative expenses in the accompanying consolidated statement of operations. Revenues included in the Partnership’s consolidated operating results for Consumers Petroleum from January 25, 2022, the acquisition date, through December 31, 2022 amounted to $283.2 million.

Supplemental Pro Forma Information—The following unaudited proforma information for the year ended December 31, 2022 presents the consolidated results of operations of the Partnership as if the Tidewater, Miller Oil and Consumers Petroleum acquisitions occurred on January 1, 2022, with proforma adjustments to selling, general and administrative expenses, interest expense and income taxes (in thousands, except per unit data):

Sales	$	18,965,176
Net income	$	363,130
Net income attributable to common limited partners	$	342,140
Basic net income per common limited partner unit	$	10.08
Diluted net income per common limited partner unit	$	10.05