Cloquet-based Little Store chain being sold
A longtime, family-owned Northland gas station and fuel oil business is in the process of being sold to new owners. Mike McKinney, director of operations for Cloquet-based Best Oil and Little Stores, confirmed this week that the business is posit...
A longtime, family-owned Northland gas station and fuel oil business is in the process of being sold to new owners.
Mike McKinney, director of operations for Cloquet-based Best Oil and Little Stores, confirmed this week that the business is positioning itself for a two-part sale in the month ahead.
The retail end of the business, the Little Store chain of gas and convenience stores with 20 locations across the region, will be sold to TravelCenters of America LLC, also operating as TA and Petro stations. The sale is tentatively set to close on Monday.
The sale of the wholesale portion of the business, Best Oil, is tentatively slated to close on March 18. McKinney said the buyer is a Minnesota company, but he did not disclose the name.
McKinney said most of the companies’ 300 employees will retain their jobs after the sales, with only a handful being placed on temporary contracts until a future decision is made.
The sale comes as big news to an area that saw the McKinney-Lindholm families get their start more than 75 years ago and grow the operation into a regional chain. Best Oil was founded in 1939, with the Little Stores operation starting up in 1971. McKinney said the decision to sell the family business wasn’t made easily, but it’s something they have been contemplating for quite some time.
“One of the leading things was the realization that there was no fourth generation (of the family) to take it over and that we are all getting older,” he said.
A second factor, he said, was the market timing, stating that a handful of major national companies are in a “feeding frenzy” as far as acquisitions, pointing out that the Freedom Stores operations in the Twin Cities metro recently sold its 65 stores to TransAmerica.
“We have been working with consultants with an investment banking firm specializing in the petroleum industry for the past 10-15 years,” he said. “They told us that right now is really a seller’s market. With the interest rates as low as they are, we were told we could get maximum value in the next five years or so, but that window of opportunity isn’t going to necessarily last forever.”
McKinney said the decision to sell came before the competing Kwik Trip chain entered the local market, though he agreed that there was a “noticeable slowdown” for a time during the grand opening sales at the new Kwik Trip locations. But he said since that time, regular customers have started to trickle back again.
TravelCenters of America, with its headquarters near Cleveland, was founded in 1972 and has since expanded to become the largest chain of full-service travel centers in the United States. The company operates 250 travel centers in 43 states and Canada and also has 34 convenience stores with retail gas stations in Kentucky and Tennessee under the “Minit Mart” name. The company employs about 23,000 people.
TravelCenters of America is a publicly traded company that reported revenue of approximately $8-10 billion in 2014.
TravelCenters of America has just three locations in Minnesota - in Clearwater, Rogers and Albert Lea - so purchasing the Little Store chain will represent the company’s first foray into the northern Minnesota market. Messages left with the company on Friday were not returned.
The Little Store operation includes 20 gas and convenience stores, 18 of which are owned by the McKinney family and two of which are franchises.
There are five in Duluth and three in Cloquet, with the others in Esko, Carlton, Barnum, Sturgeon Lake, Floodwood, Proctor, Superior, Hinckley, Moose Lake, Two Harbors, Grand Rapids and Iron River.
Best Oil provides wholesale fuel oil delivery to 70 to 80 independent operators from International Falls and the Canadian border all the way to Ashland. Mike McKinney said his brother John, who is president of the company, will stay on as director of that business, which will lease space from the McKinneys in the current headquarters building in Cloquet.
The McKinney family will retain ownership of the company office complex on Avenue B as well as five or six auxiliary buildings and adjacent land across the railroad tracks and south of Avenue B.
The family also plans to retain its Frank Lloyd Wright-designed gas station on the corner of Highway 33 and Cloquet Avenue, the only one of its kind in the world, with its affiliated Best Service operation. They also will retain ownership of 15 acres of land across from Wal-Mart on Highway 33 South in Cloquet, on which stands a home - known as Mantyla - designed by Frank Lloyd Wright for the Lindholm-McKinney family.
Mike McKinney said the employees of Best Oil/Little Stores already have started training sessions in anticipation of the upcoming transition.