4 Highlights From Couche-Tard’s Annual Shareholders Meeting

LAVAL, Quebec -- The future of a public company is always the subject of discussion during a shareholders meeting. This certainly was the case for global convenience-store company Alimentation Couche-Tard Inc., which held its annual meeting Sept. 19 in Laval, Quebec.

From the future of ownership to marijuana as a product offering, here are a few highlights from the recent meeting …

During the shareholders meeting, Alain Bouchard, co-founder and chairman, said the future of this global company may be in jeopardy.

Bouchard and co-founders Richard Fortin, Real Plourde and Jacques D'Amours control Couche-Tard through a special class of multiple voting shares that carry 10 votes each. Under a sunset clause written in 1995, those special voting rights are scheduled to expire in 2021 when the youngest of the founders, D'Amours, will turn 65.

Last year, a proposal to extend the clause was shelved when the issue failed to gain enough positive feedback. Some shareholders were uneasy about the prospect of the founders’ children inheriting their controlling position in the company, sources told The Globe and Mail.

Bouchard blamed "investors in Toronto" for blocking the plan but said he thought that a solution could be found over the next five years to protect the chain from the threat of a hostile takeover.

This year, Bouchard was less optimistic, expressing doubts that the founders will be able to maintain control. "There aren't a lot of solutions here" to maintain the founders' ownership, he told the newspaper. "We've tried. I'm not optimistic.”

Brian Hannasch, Couche-Tard’s CEO, said to The Globe and Mail about the founders, "They've been fantastic owners, great managers of the business, entrepreneurs and great mentors to me. So I would love to see them continue. But the management team's focus is on shareholders, and that's all shareholders."

Couche-Tard's retail network includes nearly 9,500 c-stores in North America, 2,750 in Europe and 1,700 licensee stores in 17 countries and territories worldwide, which brings the total network to close to 14,000 stores.

The company has been on an acquisition spree in the past few years. In 2017, it has picked up major retailers Holiday Stationstores and CST Brands Inc. It acquired Ireland's Topaz in 2015, The Pantry in 2014 and Norwegian chain Statoil in 2012, among other deals.

It has now set has its sights on Asia, where it is seeking to enter the Thai and Indian markets, according to a Bloomberg report.

Bouchard told shareholders that the company is crafting a strategy for the two countries while also looking for ways to increase its presence in southern China, where it has a foothold through licensing agreements but does not operate stores.

“We’ve had concrete conversations with people, with management teams, with companies,” CEO Brian Hannasch told the news agency. “There’s a lot of work to do to really understand the cultures, the ability to have a level playing field, to compete fairly.”

Couche-Tard may now pause its shopping spree as a way of lowering its debt, but Hannasch said acquisitions are “part of our DNA,” with lots of opportunity for large deals in Europe and some left in North America and possibly Mexico, said the report.

Couche-Tard has also been trying to improve its food and beverage offerings to get people to spend more in stores and reduce the company’s reliance on fuel and its volatile margins, Bloomberg said.

The retailer recently said it is expanding its new Simply Great Coffee program throughout its network; bringing its Polar Pop fountain to more stores; rolling out a Mexican food concept in Dublin, Ireland and Norway; and debuting a new hot-dog program in Ireland.

Couche-Tard estimates that food accounted for 12% of merchandise sales in the year ended last April, down from 13% the year before, the report said. Food sales are the fastest-growing category, said Hannasch, who also sees even more opportunities with hot and cold beverages.

Couche-Tard would like to sell cannabis in some of the more than 2,000 c-stores it operates in Canada, reported the Canadian Press.

The Ontario government announced earlier this month its plan to open 150 dedicated marijuana stores run by the province's liquor control board. The Quebec government is still weighing how the product will be sold in the province; the federal government has committed to legalizing marijuana as of July 2018.

Couche-Tard has hired a lobbyist to work on ensuring it is involved in the cannabis-distribution system in Quebec, but Bouchard said the provincial government has not responded.

"They do not even want to talk to us, so I think it is a shame," Bouchard told the news agency. "We have the ability to sell this product while meeting all government requirements, [and] we can train our staff on verifying the identity of all consumers, regardless of their age."

The government of Quebec has said that selling cannabis in c-stores would have the effect of "trivializing" the trade in this product.

"It insults me; it insults me to the highest point," Bouchard told RDI Economy. "I have been working for 40 years to build credibility in our type of business in Canada, the United States and around the world. And I am insulted by them saying that it would trivialize a product to authorize us to sell it.”