Lone Star to sell MRH to CD&R's MFG for £1.2bn

The deal is an exit for Lone Star Fund IX, a $7.2bn vehicle that held its final close in July 2014.

A spokesperson for Lone Star declined to comment on the returns generated from the deal, though an industry source told Unquote it provided a "very healthy return" for the GP.

The acquisition by MFG brings to an end Lone Star's plans to list the company, having reportedly appointed Numis Securities, JP Morgan and Citi last year to explore an IPO for the business.

According to a statement issued by the vendor, CD&R provided fresh capital to MFG in order to support the deal. It comes 33 months after the GP acquired MFG from Patron Capital Partners in a deal worth £500m.

As part of the merger between MRH and MFG, MFG chair Alasdair Locke will become chairperson of the consolidated group.

The transaction is subject to regulatory approval and is scheduled for completion in the second quarter of 2018.

Following the deal, the consolidated group will operate 900 petrol stations across the UK, comprising company-owned, franchise and managed third-party sites. These include sites operating under brand names such as BP, Esso, Jet, Murco, Shell and Texaco, with concessions including Budgens, Costa Coffee, Greggs, Spar and Subway.

MRH undertook an acquisitive growth strategy under Lone Star's tenure, most recently acquiring Peregrine Retail and Chartman Retail in September 2017. It also recently entered into an agreement with Ionity – a joint venture between BMW Group, Daimler, Ford Motor Company and the Volkswagen Group – to introduce high-power charging facilities for electric vehicles at a number of its sites.

The independent petrol station sector has undergone significant consolidation in recent years after a number of oil companies decided to divest sites following the entry of supermarkets into the segment. TDR Capital acquired a minority stake in British petrol station forecourt retail operator Euro Garages in October 2015, in a deal valuing the company at £1.3bn. Euro Garages bolted on Netherlands-based European Forecourt Retail Group in October 2016.

Previous funding
MRH first received private equity backing in 2008, when Equistone Partners acquired a 38% stake in the business (then known as Malthurst).

Lone Star then acquired the company in January 2016 in a deal valued at more than £500m, according to Unquote Data.

Company
Founded in 1997 and headquartered in Staines-upon-Thames, Surrey, MRH operates 491 petrol stations under the BP, Shell, Esso and MRH brands. According to publicly available documents, the group generated a turnover of £2.1bn in the year ending in October 2016, with EBITDA excluding exceptional items of £89m. The aforementioned industry source told Unquote that MRH now generates around £100m in EBITDA.

People
Clayton Dubilier & Rice – Marco Herbst, David Novak (partners).
Lone Star Funds – Donald Quintin (Europe president).
Motor Fuel Group – Alasdair Locke (chairperson).
MRH – Karen Dickens (CEO).

Advisers
Acquirer – Goldman Sachs International (M&A); RBC Capital Markets (M&A); Investec (M&A); Clifford Chance (legal); Debevoise & Plimpton (legal); Alix Partners (financial due diligence); EY (financial due diligence); McKinsey & Company (commercial due diligence).
Company – Lazard (M&A); Weil Gotshal & Manges (legal); PwC (financial due diligence); OC&C (commercial due diligence).
Management (MFG) – Dorsey & Whitney (legal); Wyvern Partners (corporate finance).
Management (MRH) – Charles Russell Speechlys (legal).

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• Topics
• Exits
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• Clayton Dubilier & Rice
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