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Petroleum powerhouse needed accelerated valuation to acquire company’s 1,400 retail locations

RFP
THE SITUATION
Refining company on the brink of buying energy retailer’s locations
A large refining, marketing and transportation company acquired the retail segment of another large U.S. company that explores, produces, transports and refines natural gas and crude oil. Although maintaining exploration and production operations in 18 countries, the acquired company’s logistical chain operates primarily in the northeastern United States, with nearly 1,400 convenience store and gas station locations selling refined petroleum products to customers over a 16-state area. With the expectation of realizing synergies that would include distribution and logistics, the purchasing company was to pay $2.82 billion for the retail business, making it the largest company-owned and operated convenience store chain in the U.S. by revenue.

THE CHALLENGES
Accurate, reliable valuation needed for accelerated acquisition
The acquisition had an accelerated time frame to completion, and the purchaser needed consultation in accurate and reliable fair value measurements for both financial reporting and tax implications. Maintaining investor confidence was a significant objective. Additionally, considering the deal size and purchase consideration, regulatory agencies were very likely to be involved in the transaction, making accurate and supportable analyses paramount.

WHAT THE TEAM DID
22 days. 4,442 hours. 5 offices
Grant Thornton LLP was brought in to manage the valuation of assets. Over 22 days, our professionals valued all of the tangible machinery and equipment and tangible and intangible real estate assets acquired. It started with the review and organization of thousands of supporting documents received. The entire team worked closely with the client’s auditors throughout the engagement, not only to set and manage timing expectations, but also to create a seamless review process upon completion. Once the proposed methodology gained acceptance by both the client and its auditor, we identified critical team members in our firm based on their business, real estate and equipment valuation skill sets. They had experience with fair valuing the business enterprise acquired and allocating among the various tangible and intangible real estate and equipment assets acquired and liabilities assumed. The team members coordinated across multiple offices and time zones to complete the valuation of each of the components, and less than one month later, the entire purchase price allocation was completed. Grant Thornton’s work was relied on for both financial reporting and tax purposes.

OUTCOMES
Reporting deadlines achieved — acquisition complete
With a market and income approach to the valuation of tangible and intangible assets, Grant Thornton assisted the purchasing company in meeting all of its financial and tax reporting deadlines. The agility of our firm allowed our team to focus all efforts on one client for one purpose. All communication channels were open to the client as any member of the engagement team was available, resulting in efficient, effective and routine collaboration. Grant Thornton brought its stellar reputation and multitude of quality relationships with industry professionals to the table, which resulted in reduced audit fees for the client and a work product that the company and shareholders could place 100% confidence in over a very compressed time frame.