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Couche-Tard Acquiring CST Brands

Leading Canadian convenience store operator Alimentation Couche-Tard Inc. plans to acquire CST Brands in an all-cash transaction totaling about $4.4 billion.

Quebec-based Couche-Tard operates more than 12,000 stores worldwide, including 7,888 in North America, making it the largest independent c-store operator in terms of number of company-operated stores. Based in San Antonio, Texas, CST operates 2,000-plus locations throughout the southwestern U.S., with a strong presence in Texas; in the southeastern state of Georgia; in the state of New York; and in eastern Canada.

CST Brands had announced in March that it was exploring strategic alternatives to enhance stockholder value.

The purchase price for CST is $48.53 per share; the $4.4 billion includes net debt assumed. The terms and conditions of the agreement were unanimously approved by the boards of both companies. The transaction price represents a premium of 42 percent to CST’s closing share price on March 3, 2016—the last trading day prior to CST announcing that it would explore its alternatives.

The all-cash transaction is expected to be financed by Couche-Tard’s available cash, existing credit facilities and a new term loan. The CST transaction is expected to close in early calendar year 2017 and is subject to the approval of CST’s stockholders and regulatory approvals in the U.S. and Canada.

In addition to its convenience stores, CST also controls the general partner of CrossAmerica Partners LP (CAPL), owns 100 percent of its incentive distribution rights and holds a significant equity investment in it. CAPL distributes branded and unbranded road transportation fuel to more than 1,100 locations in the U.S. CST employs more than 14,000 people.

Couche-Tard also has nearly 2,700 stores in Europe as well as nearly 1,500 stores under licensing agreements under the Circle K banner in 13 other countries and territories worldwide.

“We look forward to welcoming CST and CAPL to the Couche-Tard family,” said Brian Hannasch, Couche-Tard’s president and CEO. “CST is an excellent company and is well positioned in the southwestern United States with an important presence in Texas, Georgia, in the U.S. Southeast region, New York and eastern Canada. With this transaction we would strategically strengthen our positioning in both the ‘sun belt’ and the east coast of North America. Our teams are looking forward to meeting CST customers and welcoming them into the Couche-Tard family.”

Hannasch added, “We are excited to share best practices with CST as well as to combine the capabilities of CST’s team with Couche-Tard’s, to enhance value for our stockholders. We strongly believe that our all-cash offer is a compelling one for CST’s stockholders, giving them the opportunity to realize full and immediate value for their investment.”

Alain Bouchard, founder and executive chairman of the board of directors of Couche-Tard, said, “I have always thought that in our industry ‘size matters’, whether that be for purchasing, logistics, best practices or for becoming famous for our product categories. The addition of CST’s exceptional people and its strategic assets takes us one step further towards all these goals. I look forward to welcoming the CST and CAPL teams onboard into our growing company.”

Upon completion of the transaction, Couche-Tard would establish a new business unit in San Antonio with attached shared services operations.


Couche-Tard to sell certain Canadian assets post-close

Couche-Tard also has entered into an agreement with Parkland Fuel Corp., pursuant to which it would sell certain Canadian assets of CST after the merger for approximately $750 million. The assets in Canada that would be sold include CST’s Cardlock business; CST’s Dealer and Commission Agents business; CST’s Commercial and Home Energy business; a number of company-operated stores to be determined following the Competition Bureau of Canada’s review of the transaction; and CST’s Montréal corporate head office.

This transaction is subject to customary regulatory approval and closing conditions. Couche-Tard intends to use the proceeds from this sale to repay part of its credit facilities.

About the author


Lorrie Griffith

An observer of the grocery industry since 1988. Away from her editor job, she's a wife and mother of two grown sons and thinks cooking is (usually) relaxing.

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