Berry-Hinckley break-up unplanned but profitable

Paul Morabito didn't buy Berry-Hinckley Industries with an eye toward taking it apart to sell its component units.

But it ended up that way, and the investors who came along with Morabito when he bought the Reno-based company a couple of years ago did just fine as a result.

Jerry Herbst, owner of the Terrible Herbst chain of service stations based in Las Vegas, is buying the retail side of Berry-Hinckley Industries 33 Winner's Corner convenience stores and gas stations, three car washes, the rights to develop seven convenience stores in the region and the rights to buy a slot route operator.

That deal comes just weeks after Morabito agreed to sell the wholesale petroleum and card-lock operations of Berry-Hinckley to Nella Oil Co. of Auburn, Calif.

All of the companies involved are privately held, and none of the financial details were disclosed.

Morabito says he didn't plan to part-out the company.

"We didn't buy it to sell it. We bought it as a long-term investment," he said last week.

Initially, the strategy of Morabito and his investors was to grow Berry-Hinckley, and the company struck deals to acquire the Bully's chain of sports bars based in Reno as well as gaming-and-gasoline operator Cashell Enterprises.

Those deals came unraveled last autumn.

At the same time that he was pursuing acquisitions, Morabito also was fielding calls from folks who had their eyes on one piece or another of Berry-Hinckley's wide-ranging interests in petroleum, gaming and retailing.

"Finally, it got to a point where it was either go away or give me an offer," he said.

Terrible Herbst Inc., meanwhile, was looking to extend its brand into northern Nevada. The company owns 125 gas stations and convenience stores in the Las Vegas area as well as California, Utah and Arizona.

(The company owned by Jerry and Maryanna Herbst is a separate corporate entity from Herbst Gaming Inc., the publicly traded company that purchased Sands Regent Corp. in Reno. The three sons of Jerry and Maryanna Herbst Ed, Tim and Troy run the public company.)

"The only way he could establish his business model in northern Nevada was to buy us," said Morabito.

The combination of deals with Terrible Herbst and Nella Oil paid off for the investors who came with Morabito when he purchased Berry-Hinckley two years ago.

"We did very well with it," Morabito said. "We're happy."

Morabito isn't done doing business in northern Nevada.

The investor group that sold Berry-Hinckley plans to develop a mini-casino and truck stop in Fernley, and it continues to own 30 Jiffy Lube franchise in Nevada and California. The group also owns an 11-store gas station chain at Scottsdale, Ariz.

Other possibilities, Morabito said last week, would include other acquisitions in the gaming industry.

"We're very open to opportunities," he said, noting that the group wants to focus its efforts on northern Nevada because of its strong support by government leaders as well as consumers for business.

The Terrible Herbst acquisition of the service stations is expected to close in March. The deal for the slot-route operations requires the OK of state gaming officials and probably won't close until late 2007 or early 2008.

Jerry Herbst was advised in the transaction by Silver Pacific Advisors. Berry-Hinckley was advised by BCC Capital Partners.