Couche-Tard Polishes Up Sterling Deal

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LAVAL, Quebec -- Continuing its acquisition trajectory, Alimentation Couche-Tard Inc., through its subsidiary Mac's Convenience Stores LLC, signed an agreement late last week to acquire 28 stores in northwest Ohio from Sterling Stores LLC, Wauseon, Ohio, as reported in a CSP Daily News Flash.

The 28 c-stores currently operate under the Sterling banner and are all company-operated; 24 of the stores sell unbranded gasoline and the remaining four locations sell BP-branded fuel. The stores will be converted to the Circle K banner and will be operated by [image-nocss] the Circle K Great Lakes division. The unbranded fuel would be sold under the Circle K brand and the BP gasoline brand will remain unchanged.

Pursuant to this deal, the company will buy the land and buildings for 26 locations and will purchase the buildings and assume the third-party land leases for the other two locations. According to the agreement, a long-term land lease will be in place for one of the latter properties while the other lease agreement contains a purchase option.

"Subsequent to this transaction, our network in the Circle K Great Lakes division would include a total of 302 company-operated stores. The 28 stores are located on highly visible and well-traveled roads and occupy strategic locations within their respective trade areas," said Paul Rodriguez, vice president of operations for the Great Lakes Division. In addition, these sites are well operated and have a strong management team in place. Strategically, this acquisition would be an excellent fit with our network and would complement our expansion and growth plans for the Great Lakes division.

Should the transaction close as anticipated in May 2007, these assets would add sales to Couche-Tard's revenues and contribute to its earnings on an annualized basis. Sterling's total 2006 sales for the subject stores were approximately $170 million U.S. The transaction is subject to standard regulatory approvals and closing conditions. According to a confidentiality agreement, the purchase price cannot be disclosed at this time. Internal available cash dollars will pay for the transaction.

Jerry Dehnbostel, mayor of Wauseon, told The Toledo Blade that he was advised by a Sterling Stores official that the deal likely would involve the closure of corporate offices and an adjacent milk-bottling plant in the city's downtown.

The Sterling Milk Co. was founded by Peter Goldsmith in 1934. In its first 15 years, delivery drivers traveled from house to house filling orders for milk, eggs, and other products. The chain opened its first store in 1950 and abandoned route deliveries entirely seven years later, the report said.

Nesnah Ventures Inc., Holmen, Wis., purchased the Sterling Milk Co. in March 2002, marking the return of Kwik Trip founder John J. Hansen to the c-store business, reported The La Crosse Tribune at the time. The Hansen family started Nesnah after it sold its interest in Kwik Trip Inc. to the Donald P. Zietlow family in July 2000. The two families had jointly owned the La Crosse, Wis.-based firm since 1972. Kwik Trip started in 1965. Hansen and members of his family are the primary owners of Nesnah, which is Hansen spelled backwards.

Laval, Quebec-based Couche-Tard currently operates a network of 5,360 convenience stores, 3,308 of which include motor fuel dispensing, located in nine large geographic markets, including six in the United States covering 27 States and three in Canada covering six provinces.

Over the past year or so, Couche-Tard has acquired hundreds of retail sites:

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