MONTREAL -- Canadian grocer Metro Inc. said it would sell nearly half of its stake in Alimentation Couche-Tard Inc. for $479 million (Canadian; $482.6 million U.S.), cashing in a large portion of its investment in the North American convenience gasoline retailer.
Metro will sell 10 million shares, or 48.2% of its Couche-Tard stake to BMO Nesbitt Burns Inc, National Bank Financial and TD Securities Inc at $47.90 (Canadian) a share. Couche-Tard closed at $48.98 (Canadian) on the Toronto Stock Exchange on Tuesday, reported Reuters.
The sale represents approximately 7.2% of the outstanding Class B subordinate voting shares of Couche-Tard and approximately 5.3% when combined with the Class A multiple voting shares.
The completion of the sale will occur within the next three business days and will be preceded by the conversion of 4.276 million of Metro's Class A multiple voting shares of Couche-Tard into Class B subordinate voting shares, in accordance with Couche-Tard's articles. The remaining 5.24 million Class B subordinate voting shares are already held as such by Metro.
This purchase and sale transaction allows Metro to monetize approximately 48.2% of its aggregate participation in Couche-Tard shares, valued at approximately $1 billion prior to the transaction based on the offer price.
Following this sale of shares, Metro remains the owner of 10.742 million Class A multiple voting shares, representing 21.8% of all Class A multiple voting shares currently issued and outstanding, an economic interest of approximately 5.7% and a voting interest of approximately 17%.
"Metro has been a key shareholder of Couche-Tard since 1987, and we are extremely pleased with the performance of the company," said Eric R. La Fleche, president and CEO of Metro. "At this time, given the market value of our holding in Couche-Tard relative to Metro's total value, we decided to monetize a portion of our investment. We still retain a significant economic and voting interest in Couche-Tard, and look forward to the continued growth of our investment."
He added, "We are evaluating opportunities for the use of proceeds, including investments for growth and returns to shareholders."
With annual sales of more than $12 billion and more than 65,000 employees, Metro is a leader in the food and pharmaceutical sectors in Quebec and Ontario, where it operates a network of more than 600 food stores under several banners including Metro, Metro Plus, Super C and Food Basics, as well as more than 250 drugstores under the Brunet, The Pharmacy and Drug Basics banners.
Canadian grocers like Metro, Loblaw Cos. Ltd. and Empire Co. Ltd.'s Sobeys have come under mounting pressure over the last two years as Wal-Mart Stores Inc. expands its grocery business in Canada.
The transaction announced on Tuesday is a bought deal, which typically involves a small group of institutional investors or banks acquiring a large equity stake in a company at a slight discount to market price, said Reuters. Such deals eliminate risk to the seller and allow buyers to later market smaller chunks of the equity at a higher price to other investors, it said.
Couche-Tard board member Jean Elie was nominated by Metro, but is not otherwise related to Metro, Couche-Tard said on its governance website. The board considers Elie to be an independent director given that the company does not have significant business dealings with Metro and that Metro does not control the company, said Couche-Tard.
Laval, Quebec-based Couche-Tard's network currently includes almost 6,200 c-stores throughout North America, including approximately 4,500 stores with fuel. It has agreements for the supply of motor fuel to more than 350 sites operated by independent operators. Its North-American network consists of 13 business units, including nine in the United States covering 40 states and the District of Columbia (under the Circle K banner) and four in Canada covering all 10 provinces (under the Couche-Tard and Mac's banners). Through its acquisition of Statoil Fuel & Retail, Couche-Tard also operates a broad retail network across Scandinavia (Norway, Sweden, Denmark), Poland, the Baltics (Estonia, Latvia, Lithuania) and Russia.
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