LAVAL, Quebec — In a transaction that provides it with a platform in Asia from which to pursue its long-sought-after regional growth ambitions, Alimentation Couche-Tard Inc. has agreed to acquire all of the shares of Convenience Retail Asia (BVI) Ltd. for approximately $360 million.
A subsidiary of Convenience Retail Asia, Circle K HK operates a network of Circle K-licensed c-stores, with 340 company-operated sites in Hong Kong and 33 franchised sites in Macau.
Circle K HK holds the second largest market share in Hong Kong, one of the most economically developed markets in Asia and most densely populated regions in the world, with room to grow organically, Couche-Tard said.
Circle K HK has developed expertise in loyalty, with approximately 1.6 million “OK Stamp It” members, and has established a strong private-label program, as well as advanced merchandising, technology and supply-chain capabilities, said Couche-Tard. Over time, Couche-Tard expects to benefit from Circle K HK's experienced management team to gain its goal of access to further opportunities in the Asia-Pacific region, while also leveraging the team's insight and knowledge of the high-density urban retail format in its worldwide retail network.
“I have followed Circle K Hong Kong's progress closely for decades and deeply admire its leadership team and retail expertise,” said Alain Bouchard, founder and executive chairman of Couche-Tard's board. “I look forward to welcoming their team members and stores into the Couche-Tard family and have no doubt that together we can reach millions more customers in Hong Kong and across Asia as we move forward in our journey to become the world's preferred destination for convenience and fuel.”
Brian Hannasch, president and CEO of Couche-Tard, said, “Circle K Hong Kong is one of the best convenience-store operators in Asia and will be an excellent fit within our company. We are excited to partner further with their highly advanced team in terms of innovation, loyalty, private label, retail execution and ability to grow market share. Upon closing of this transaction, Couche–Tard will reach a milestone in its strategic ambition of entering the high-growth Asia–Pacific market with a first-rate management and operations team, which has the credibility, experience and capabilities to support future expansion in the region.”
“We have long viewed the Asia-Pacific region as strategic to Couche-Tard's future growth," Hannasch said earlier this year when the company was a bidder for Caltex Australia Ltd. The company ultimately suspended the bid because of the pandemic.
“The board fully endorses the sale of Circle K Hong Kong to our long-term partner and franchisor," said Victor Fung, chairman of CRA. "This is a win-win for both companies. Our investors will gain from a good return on their investment and Couche-Tard will benefit from a first-class organization of dedicated and loyal team members who have contributed to the success of Circle K in Hong Kong.”
Under the terms of the agreement, Couche-Tard will acquire Circle K HK on a cash-free and debt-free basis. The final purchase price will be subject to working capital and other balance sheet adjustments. Couche-Tard will finance the transaction, which it expects to close by Dec. 31, 2020, through available cash on hand, and it will be subject to usual closing conditions, approval by shareholders, as well as regulatory clearances and customary conditions.
CRA, a member of Fung Retailing Group, operates 373 Circle K stores in southern China, among other retail outlets.
As of July 19, 2020, Laval, Quebec-based Couche-Tard's network included 9,274 c-stores in North America, including 8,088 stores with fuel dispensing. Its North American network consists of 18 business units, including 14 in the United States covering 47 states and four in Canada covering all 10 provinces.
In Europe, Couche-Tard operates a retail network in Scandinavia, Ireland, Poland, the Baltics and Russia through 10 business units. It includes 2,714 stores and unmanned automated fuel stations.
And under licensing agreements, close to 2,350 stores operate under the Circle K banner in 15 other countries and territories (Cambodia, Egypt, Guam, Guatemala, Honduras, Hong Kong, Indonesia, Jamaica, Macau, Mexico, Mongolia, New Zealand, Saudi Arabia, the United Arab Emirates and Vietnam), which brings Couche-Tard’s worldwide total network to close to 14,350 stores.