GIG HARBOR, Wash. -- Craig Eerkes, president and CEO of Sun Pacific Energy, Gig Harbor, Wash., cited growing competitive issues as the reason behind the sale of 27 of the company's eastern Washington convenience stores to Alimentation Couche-Tard Inc.'s Circle K Stores Inc. subsidiary.
"Our industry has reached a point where you have to be 200-plus stores in order to compete. We only have 36, and it's going to be very difficult to get to the 200-store level," he told CSP Daily News.
However, Sun Pacific has retained nine retail sites and more than 75 wholesale accounts, as well as its commercial and agricultural business.
As reported in a Raymond James/CSP Daily News Flash, Couche-Tard announced the deal to acquire the stores, located primarily in the Tri-Cities area of Pasco, Kennewick and Richland, Wash., operating under the Sun Mart banner.
As part of the agreement, neither Sun Pacific nor Couche-Tard will continue the use of the Sun Mart name, said Eerkes. Sun Pacific's remaining locations "will retain their oil company affiliations. We don't have a new marketing name yet."
The locations are branded Shell and Exxon.
All of the stores that Couche-Tard has acquired are company-operated, and 26 offer motor fuel, of which 19 are Shell branded and the other seven are Exxon branded. The corporation expects these sites would bring a total additional volume of more than 43 million gallons in motor fuel sales annually, and nearly $35 million in merchandise revenue. Three of the sites are equipped with car washes, and five have sandwich offers under the Subway or Blimpie brands.
The sites will be operated by Couche-Tard's West Coast Division under the Circle K brand. Pursuant to this transaction, the corporation would buy the land and buildings for 26 locations and would assume or enter into leases for the remaining location.
"This is a great opportunity for the West Coast Division to make an entry into a new market with very high quality assets from an outstanding and highly respected operator. I am very confident the assets, market, and team would make an immediate positive contribution to the Corporation. This transaction would bring the company-operated store count for the division to 252," said Tim Tourek, vice president of operations for Couche-Tard's U.S. West Coast Division.
Eerkes said that Sun Pacific decided to sell to Couche-Tard because Couche-Tard agreed to the "assumption of all of our personnel including our key management. Their customer and employee philosophy closely aligns with ours."
The transaction is anticipated to close in November 2012. The transaction is subject to standard regulatory approvals and closing conditions. According to a confidentiality agreement between the parties the purchase price cannot be disclosed at this time. Internal available cash dollars and available credit facilities will fund the transaction.
As of April 29, 2012, Laval, Quebec-based Couche-Tard had a network of 5,803 convenience stores, 4,216 of which include motor fuel dispensing, as well as agreements for the supply of motor fuel to 350 independent operator sites. Couche-Tard's network consists of 13 business units, including nine in the United States covering 42 states and the District of Columbia (primarily under the Circle K flag), and four in Canada covering all 10 provinces (primarily under the Mac's and Couche-Tard flags). Following its acquisition of Statoil, Couche-Tard also operates a retail network across Scandinavia, Poland, the Baltics and Russia with approximately 2,300 stores.
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