Applegreen ends $750m Massachusetts service stations deal amid legal challenge

Fuel and forecourt retail group says failure to agree definitive terms of deal had significant implications for its commercial viability

Applegreen has decided to terminate its $750 million agreement with the MassDOT and Global Partners, a fuel distributor, to redevelop and operate travel plazas across the US state of Massachusetts.

Applegreen has officially terminated its $750 million agreement with the Massachusetts Department of Transportation to redevelop and operate 18 highway service plazas. The decision was made after three months of negotiations that failed to reach a final agreement on terms.

The company cited ‘commercial realities’ and ‘costly continued litigation threats’ from Global Partners as the reasons for the withdrawal.

Applegreen expressed regret for not being able to bring its expertise to the Commonwealth and acknowledged the financial risks presented by the deal.

The future of the Massachusetts travels plazas remains uncertain, with the state likely seeking new bids for the project.

The Irish Times reported that the Dublin-based group, which is backed by US private equity giant Blackstone, had planned to invest more than $750m in the network.

Fuel supplier Global Partners, which had been seen as the favourite to be selected by the Massachusetts Department of Transport (MassDOT), has been challenging the decision in court since Applegreen was selected in June.

“After three months of good faith negotiations, Applegreen and MassDOT have not reached agreement on definitive terms for the redevelopment of 18 motorway service areas in Massachusetts,” Applegreen said in a statement.

“The open issues have significant implications for the commercial viability of the concession award. These commercial realities have been coupled with costly and continued litigation threats from an opposing bidder that have jeopardised the project’s timeline and financing.”

Applegreen entered US market in 2014 when it bought two sites in Long Island.

In 2020, the group was part of a consortium that signed a 33-year lease to refurbish and operate 27 motorway plazas on New York Thruway, a system of toll roads within the state of New York. It does not have the fuel sale element of that deal.

Applegreen runs more than 100 US motorway service areas, where it operates restaurant and cafe brands such as Burger King, Shake Shack, Chick-fil-A, Popeyes, Starbucks, Dunkin’, Panera Bread and Panda Express.

The company was founded by Mr Etchingham in 1992 with one station in Ballyfermot, west Dublin. It now has almost 200 locations in the Irish market. The company typically invests more than €30 million a year in the Irish market on store openings, upgrades and improvement.

Applegreen was taken private from the stock market in March 2021 by Blackstone in a €718 million deal that saw Mr Etchingham and long-standing executive Joe Barrett retain a combined 42.5 per cent stake in the group.

Applegreen sold its British filling station business to rival EG On The Move earlier this year for an undisclosed sum. That business had 98 sites. The company said it would use the proceeds from the transaction to invest in its business in Ireland, the UK and the US.

The deal did not affect Applegreen’s Welcome Break motorway service business in the UK, which also has a network of 31 hotels, the Irish Times reported.