BP Products North America, a subsidiary of BP, has reached an agreement to purchase TravelCenters of America (TA). The acquisition, which is subject to regulatory and TravelCenters of America shareholder approval, will be for $1.3 billion in cash.

The companies say TA’s network of highway sites complements BP’s existing predominantly off-highway convenience and mobility business, enabling TA and BP to offer fleets a seamless nationwide service. In addition, BP’s global scale and reach will, over time, bring advantages in fuel and biofuel supply as well as convenience offers for consumers, BP says. It will provide options to expand and develop new mobility offers including electric vehicle (EV) charging, biofuels, renewable natural gas (RNG) and later hydrogen, both for passenger vehicles and fleets.

Convenience is one of BP’s five strategic transition growth engines it aims to grow this decade. By 2030, BP says it aims for around half its annual investment to go into these transition growth engines. Over 2023-2030, the company aims that around half of its cumulative $55-65 billion transition growth engine investment will go into convenience, bioenergy and EV charging.

“This is BP’s strategy in action. We are doing exactly what we said we would, leaning into our transition growth engines,” said Bernard Looney, CEO of BP. “This deal will grow our convenience and mobility footprint across the U.S. and grow earnings with attractive returns. Over time, it will allow us to advance four of our five strategic transition growth engines. By enabling growth in EV charging, biofuels and RNG and later hydrogen, we can help our customers decarbonize their fleets. It’s a compelling combination.”

The acquisition is expected to bring around 280 TravelCenters of America sites, spanning 44 U.S. states nationwide, into the BP portfolio. These travel centers, which average around 25 acres, offer a full range of facilities for vehicles and fleet trucks, including more than 600 full-service and quick-service restaurants, as well as truck maintenance and repair services. Around 70% of TA’s total gross margin is generated by its convenience services business, almost double BP’s global convenience gross margin.

The acquisition price of $1.3 billion, or $86 per share, represents a multiple of around six times based on the last twelve months’ TA EBITDA (4Q21 to 3Q22). It is expected to add EBITDA for BP immediately, growing to around $800 million in 2025.

BP says the acquisition supports the delivery of BP’s convenience and EV charging growth engine target of more than $1.5 billion EBITDA in 2025 and aim for more than $4 billion in 2030. BP expects the acquisition to be accretive to free cash flow per share from 2024 and to deliver a return of over 15%.