LAVAL, Quebec -- Alimentation Couche-Tard Inc. said it has obtained clearance from the U.S. Federal Trade Commission (FTC) to acquire Holiday Stationstores Inc. Couche-Tard and its affiliate CrossAmerica Partners LP have agreed to divest 10 gas stations to settle FTC charges that Couche-Tard’s acquisition of Holiday would violate federal antitrust law.
The companies said they expect the deal, announced in July, to close Dec. 22, 2017.
Holiday's main assets consist of 522 company-operated and franchise locations in 10 U.S. states, two food commissaries and a fuel terminal. It operates 374 stores, and franchisees operate 148 stores.
"We are very excited to announce this new addition to the Couche-Tard family," said Brian Hannasch, president and CEO of Couche-Tard, Laval, Quebec. "The Holiday assets are a strong strategic fit for our business and expands the corporation's reach to 48 of the 50 U.S. states. Adding the Holiday stores, commissaries and fuel terminal, as well as its highly successful programs and employees, pushes us further in our journey to become the world's preferred destination for convenience and fuel."
The FTC’s settlement with Couche-Tard and CrossAmerica for the divestment of 10 stations preserves competition in nine local markets: Aitkin, Hibbing, Minnetonka, Mora, Saint Paul (two stations) and Saint Peter, Minn.; and Hayward, Siren and Spooner, Wis. Without the divestitures, the FTC alleged, the acquisition would likely substantially lessen competition, likely leading to higher retail prices in these markets.
Without a remedy, Couche-Tard’s acquisition of Holiday would have reduced the number of independent market participants from three to two or four to three in each of the 10 local markets, according to the FTC complaint. The acquisition would have increased the likelihood that Couche-Tard and CrossAmerica would unilaterally exercise market power in all 10 markets, and increase the likelihood of successful coordination among the remaining firms in eight of the 10 markets, it said.
The companies are required to identify to the FTC a buyer or buyers that are acceptable within 120 days of the close of the transaction. The agreement also requires them to maintain the economic viability, marketability and competitiveness of each station until the divestiture is complete.
Bouchard stock sale
In other company news, Couche-Tard closed a private offering of $600 million of senior unsecured notes due in 2019 and $300 million of floating rate senior unsecured notes due in 2019. It expects to use the net proceeds from the sale of the notes for repayment of certain amounts outstanding under its senior credit facilities.
Also, Couche-Tard founder and executive chairman Alain Bouchard said he will sell 200,000 Class B voting shares that he holds and 300,000 Class B voting shares held by 9330-4103 Quebec Inc. for financial planning purposes, as well as 400,000 Class B voting shares held by the Sandra and Alain Bouchard Foundation, to meet donation commitments.
Couche-Tard's network includes approximately 9,465 mostly Circle K convenience stores in 41 U.S. states and all 10 provinces in Canada. Through CrossAmerica Partners LP, Allentown, Pa., it supplies fuel under various brands to more than 1,200 U.S. locations. In Europe, Couche-Tard operates a retail network across Scandinavia, Ireland, Poland, the Baltics and Russia that includes approximately 2,750 locations, most of which offer fuel and convenience products, while others are unmanned automated fuel stations.
And through licensing agreements, more than 1,800 stores operate under the Circle K brand 14 other countries and territories (China, Costa Rica, Egypt, Guam, Honduras, Hong Kong, Indonesia, Macau, Malaysia, Mexico, the Philippines, Saudi Arabia, the United Arab Emirates and Vietnam), which brings Couche-Tard’s worldwide total network to more than 15,200 locations.