LAVAL, Quebec -- The thought of the convenience-store industry’s leading M&A company giving it all up 15 years after crossing the border into the United States is daunting. In that time Alimentation Couche-Tard has stealthily acquired some of the biggest names in the U.S. convenience sector, displaying a confident and dominant front.
So when Alain Bouchard, executive chairman and one of the “founding four” who launched Alimentation Couche-Tard about 30 years ago, became so vexed with some shareholders that he publicly threatened to sell this global giant, both analysts and media wondered whether he was just posturing or truly threatening to break up the storied merger-and-acquisition-based retailer.
What Could Happen?
“I don’t think we’ll see the company taken out in the next six months. But we might in three or four years,” a source close to Couche-Tard told CSP Daily News on condition of anonymity. “I know this has been a frustration for [Bouchard] for a while, but I was surprised for him to go to the media. He’s a guy who sometimes doesn’t have a big filter. He says what he thinks.”
The future of Couche-Tard, owner of the Circle K and Mac’s convenience-store brands, was cast into doubt when Bouchard grew furious over concerns about the long-term control of the company he and three others founded in 1985.
Specifically, Bouchard is contesting the company’s sunset clause created in 1995. The clause would terminate special privileges of the four founders once the youngest turned 65 or died. While three of the founders—Bouchard, Richard Fortin and Real Plourde—have all hit that age, Jacques D’Amours, at 61, is three and a half years shy of activating this clause.
While there’s clearly time before the trigger would go into effect, Bouchard, father of four, is now anxious that the families’ next generation will be basically squeezed from power of a company valued today at roughly $34 billion.
“I’ve talked to governance people from Toronto. They’re standing high on their pedestal, and they’re lecturing us,” Bouchard told Montreal’s La Presse newspaper. “I don’t have time to waste with those types of people. I’m a bit fatalist, but if this forces the sale of Couche-Tard, so be it.”
Potential Sale
At first glance, it seems that Bouchard’s firestorm has done little to dent objecting shareholders. “You can understand why some shareholders would have concern for him to leave control of the business in the hands of the second generation, whom nobody knows,” the source close to Couche-Tard told CSP Daily News. “My understanding is that only one of his children is involved in the company, and that’s not in a senior position.”
The convenience sector has seen several multibillion-dollar deals of late. Speedway acquired Hess’s retail network in 2014 for $2.82 billion. And just months later, Couche-Tard purchased The Pantry for $1.7 billion.
But how much could Couche-Tard, a chain with 8,300 locations across North America and other strongholds in Europe, fetch, and who could afford such a price tag?
With at least 60% of its portfolio based in the U.S. and Canada, the source suggested a price between $18 billion and $20 billion. “It would have to be a big boy like Marathon or Kroger” or even pan-Asian retailer Dairy Farm, he said. “I don’t think you’re going to see anything change today, but we’ll [have to] see how this plays out.”
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