Noco-Marathon deal could be a win-win, analysts say

Local News

Experts in the retail and petroleum industries are reacting favorably to reports that Noco Energy Corporation is preparing to sell more than 30 of the company’s convenience stores to Marathon Petroleum Company.

The sale would involve Marathon–one of the largest oil refiners in the country–expanding from its Midwestern base into Upstate New York through its Speedway convenience stores, according to a report in The Buffalo News earlier this week. 

The scenario would find Ohio-based Marathon Petroleum buying 33 Noco Express convenience stores and rebranding them as Speedway stores–a Marathon subsidiary.

Anthony Ogorek, president of Ogorek Wealth Management in Amherst said Marathon is too big for Noco and most other convenience store operators in Upstate New York to compete with.

“They have a massive footprint, over 1,000 different stores. The scale that they can apply, the pricing power they can get, just makes a smaller operation like this uncompetitive.”

But Ogorek believes selling off the convenience stores would allow Noco, based in the Town of Tonawanda, to invest the proceeds from that sale into their other enterprises, such as their propane gas business, wholesale distribution, and real estate development.

“If you can take capital out of a relatively low margin business and then deploy it in other types of enterprises that they’ve got–that offer higher margins–it makes sense to do that.”

Experts in the convenience store sector agree, pointing out Marathon is already setting up operations in Upstate New York, and gaining more of a foothold.

Mitch Morrison vice president of the trade group, Winsight Media, said Upstate New York is underrated by retailers, “The truth is that Upstate New York, certainly when it comes to the convenience store-retail gasoline industry, is very fertile, and very dynamic.”

Morrison said Marathon bought more than 70 Express Mart convenience stores In the Buffalo, Rochester, and Syracuse markets last year, converting them to Speedways, and economic conditions in those areas are ripe to buy up many more convenience stores.

“You combine good fuel margins, affordable real estate, and the fact that you have a number of good mulit-generation operators like Noco,” said Morrison who credited the Newman family–the founders and owners of the Noco companies–for their painstaking care of the Noco brand.

Morrison and Ogorek both believe the entrance of Speedway into the market could bring Upstate New York’s notoriously high gas prices down.

Noco officials have declined to comment on a possible deal with Marathon Petroleum, referring questions to their public relations firm, which would neither confirm nor deny a sale is imminent. Marathon officials would not reply to News 4 questions sent by email.

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