Pilot, Flying J Ready to Merge After Plan Clears Final Hurdles

This story appears in the July 12 print edition of Transport Topics.

Pilot Corp. and Flying J Inc. said they are preparing to integrate their massive network of interstate truck stops after reaching several agreements that should allow their proposed merger to move forward.

Flying J announced July 7 that a Delaware bankruptcy court approved its amended strategy to exit bankruptcy and pay off its creditors. The court issued its approval a week after the Federal Trade Commission said it would back the merger if Pilot and Flying J sold 26 of their truck stops to Love’s Travel Stops and Country Stores.

After the merger, Pilot Flying J, as the combined company will be called, will operate more than 550 travel centers in 43 U.S. states and six Canadian provinces. It will be by far the largest U.S. truck-stop chain.

A spokeswoman for Love’s, based in Oklahoma City, confirmed the company planned to buy the truck stops, but she did not disclose terms of the sale. Most of the locations are in the Midwest and eastern United States, though several are west of the Rocky Mountains.

Truck stops not to be sold to Love’s will retain their current branding, according to Pilot and Flying J.

Following the publication of the FTC’s order, Pilot, Knoxville, Tenn., and Flying J., Ogden, Utah, said in a statement they had achieved “the completion of the merger of the two companies.”

“We are now one great company, two great brands,” said James Haslam III, who will be president and CEO of the combined company.

Crystal Call Maggelet, granddaughter of Flying J founder Jim Call, said that “the merger is a historic moment in our industry.”

The FTC could formalize its order as early as July 31, following a 30-day public comment period. No comments had been filed with the commission at press time.

“The proposed settlement will resolve the competitive concerns resulting from Pilot’s acquisition of Flying J’s travel center business, which would have likely resulted in higher diesel fuel prices for longhaul trucking fleets,” Richard Feinstein, director of the FTC’s Bureau of Competition, said in a June 30 statement.

Pilot and Flying J announced their merger last year, after Flying J filed for bankruptcy. Pilot proposed to buy Flying J’s truck stop business for $1.8 billion. Flying J’s oil business is not part of the deal.

After the merger is completed, Pilot Flying J will have to integrate what had been two large, independently operated truck-stop networks.

A Flying J franchisee, citing internal communications from the soon-to-be-combined company, said that the first round of changes will take about two months to implement.

“I think there’s a 60-day window here,” Dan Alsaker, chief executive officer of Broadway Flying J, Spokane, Wash., told Transport Topics.

Alsaker said some of the issues to be dealt include which fuel cards will be valid and whether the drivers’ clubs at the two truck stops will be combined.

At least part of the fuel card issue already has been ironed out: All Pilot Flying J locations will accept both TCH and Comdata fuel cards. Flying J previously did not accept Comdata, and Pilot did not take TCH.

Another change will be the reopening of certain shuttered truck stops by Love’s, which is buying 20 truck stops from Pilot and six from Flying J, some which are not currently open.

Alsaker noted that a truck stop near Tacoma, Wash., is “going to turn into a Love’s but is closed right now.” Similarly, a shuttered truck stop near Des Moines, Iowa, will be reopened as a Love’s truck stop.

Alsaker expects he soon will be “competing more with Love’s where there was never a Love’s before.”

Even before the merger, Pilot was the nation’s largest truck stop, with about 300 locations. Roady’s Truck Stops, a franchisee-only network based in New Plymouth, Idaho, has about 280 locations.

TravelCenters of America, which acquired Petro Stopping Centers in 2007, operates 233 sites, according to TA’s latest filings with the Securities and Exchange Commission.

Love’s, with about 220 locations — not counting those it has agreed to buy from Pilot and Flying J — is for now the smallest of the national truck stop networks.

Before the merger, Pilot and Flying J were two of the largest privately held companies in the United States. Pilot said it had $16 billion in revenue in 2008. For the same year, Flying J said it had revenue of $18 billion.

In October, Forbes magazine ranked both chains among the 20 largest private companies in the United States. Love’s also made the list.

TravelCenters, Westlake, Ohio, is the only publicly traded truck-stop chain.