Applegreen, which is backed by private equity firm Blackstone, indicated in a brief statement on Tuesday that Waltham-based Global’s opposition played a role in the decision to back away at this time.
“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,” the company said. “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 jeopardized the project’s timeline and financing. In light of these circumstances, Applegreen has terminated ongoing lease discussions.”
Secretary of Transportation Monica Tibbits-Nutt issued a brief statement after Applegreen’s abrupt withdrawal, saying that the bidding process has always been aimed at providing the best experience for the motorists who use the service plazas.
“After a comprehensive, transparent selection process, additional negotiations were always expected between MassDOT and Applegreen to provide the best possible value for taxpayers,” Tibbits-Nutt said. “It is now clear that Applegreen is no longer the right partner to deliver on this project. Our focus is on moving forward to deliver the highest quality service plazas as quickly as possible for the people of Massachusetts.”
What’s not yet clear is what MassDOT’s next steps will be. The agency could turn to Global, the other finalist in the competition, or rebid the entire project. MassDOT’s brief statement provided no clues on that front.
Six companies initially bid for the service plaza project last fall. By spring, the competition was down to Global and Applegreen. The Irish company had already seen success in redeveloping service plazas in other states, and, with Blackstone’s backing, has been looking to expand. Meanwhile, Global was an incumbent: It currently runs the gas stations and convenience stores at the 11 Mass. Pike plazas, as a subtenant of McDonald’s and Gulf, and operates services outright at four other plazas.
Global has largely argued that its bid was far more lucrative for the state over the life of the 35-year contract and that the process was set up to favor Applegreen. MassDOT, however, has denied any favorable treatment and said Applegreen offered much stronger investments in the plazas and would have completed the project quicker than Global.
Global, a publicly traded fuel supplier, issued its own statement Tuesday night, attributed to chief executive Eric Slifka.
“Applegreen’s decision to walk away underscores the very concerns raised for months: their proposal was never financially sound and never in the best interests of the Commonwealth,” Slifka said. “Global Partners has been rooted in Massachusetts for four generations. We are prepared to step in with a proven, low-risk transition plan that guarantees $1.5 billion in rent, and delivers on clean energy, diversity, and community commitments from day one. … We stand ready to move forward, honestly, transparently, and in the best interests of our Commonwealth.”
The controversy had sparked state Senator Mark Montigny to schedule a committee hearing on the issue at the State House on Wednesday. Montigny’s staff confirmed Tuesday evening that the hearing has now been postponed.
The two bidding teams disagree about how much money their respective bids would bring to the state. But an analysis by KPMG, an adviser to MassDOT in the process, shows Global’s bid would generate $1.3 billion to $1.5 billion for the state over the life of the contract, while Applegreen’s proposal would bring in $623 million to $994 million.
However, Applegreen pledged to invest $750 million in capital improvements, including fully replacing nine of the 18 main service plaza buildings, while Global would invest just over $500 million, per KPMG’s analysis. (Global says this comparison is misleading because KPMG used preliminary estimates.) What Applegreen had planned would have been the biggest change to the Mass. Pike plazas since they were first built in the 1950s.
Jon Chesto can be reached at jon.chesto@globe.com. Follow him @jonchesto.
