Crown Central Petroleum Corp. announced yesterday that it will buy all of British Petroleum Co. P.L.C.'s 76 service stations in Maryland, doubling the company's gasoline market share in the state.
The acquisition, which also includes five BP stations in Delaware, will give Baltimore-based Crown a total of 275 service stations, of which more than 150 are in Maryland and Virginia, according to William R. Snyder, a Crown vice president.
The purchase price of the transaction, which is expected to become final in February, was not disclosed.
Crown said that it is expanding in Maryland to try to bolster its market share, which has been slipping over the past five years. Six years ago, the company held 7.5 percent of the gasoline market in Maryland; this year, it held 5.6 percent.
Snyder said the company expects the expansion to boost its market share to about 11 percent and move it from fifth place in the state to fourth.
"In today's competitive environment, you can't continue to lose market share and be cost effective," he said. "We had to give serious consideration to withdrawing from Maryland or making a bold move to buy properties from another company that decided to withdraw."
Crown has built its business on low prices and high volume. But Snyder said the company has been hurt by Maryland's 1974 divestiture law that forbids petroleum marketers who are also refiners to operate stations. This has deprived the company of control over pricing.
"Since Crown is refining as well as marketing, we must lease to dealers," Snyder said. "Some of our dealers abandoned our low-price, high-volume philosophy, which was our strategy over the years."
Crown will be require to lease all of its newly acquired BP service stations to individual dealers.
By early March, the BP stations will be rebranded Crown stations, the company said. Of the 76 BP stations in Maryland, 65 are in operation, and Crown expects to restart operations at five more. The company plans to sell the remaining six stations.
Snyder said his firm plans to sell the five Delaware stations.
Cleveland-based BP Oil Inc. is a subsidiary of Standard Oil Co. of Ohio.
Crown's principal competitors in Maryland are Exxon, Amoco and Shell, which together have captured 50 percent of the gasoline market. Before the sale, BP itself was a strong competitor.
Crown, which now operates 46 service stations in Maryland, signed a letter of intent on Oct. 25 to buy the properties from BP Oil.
Harrison Bubb, general manager of BP's retail operations, said the company decided to leave the Maryland area after assessing the "option of remaining in Maryland and refurbishing its sites or selling the stations in the state to another company and redeploying those assets elsewhere.
BP has about 3,000 owned and leased sites worldwide.
For the nine months ending Sept. 30, Crown's net income climbed to $3.5 million (41 cents a share) on revenue of $1.65 billion from a loss of $13.12 million ($2.25) on revenue of $1.23 billion for the same period a year ago.
However, approximately $6.5 million of the company's net during the third quarter resulted from the sale of properties in California.