Couche-Tard in 'Sweet Spot' for Additional Acquisitions

Multiple opportunities arising in U.S., Canada & Europe: Analyst

Steve Holtz, Editor in Chief, CSP Daily News

LAVAL, Quebec -- Noting Alimentation Couche-Tard's success with entering new markets just as opportunity is about to explode, an analyst says the convenience store retailer is "in the sweet spot of ongoing industry change," and anticipates strong growth in the months and years to come.

"Our view is that investors should focus on the near-term benefits flowing from the Statoil Fuel & Retail acquisition (in Europe) and the significant acquisition opportunities that are likely to present themselves over the next 18 months in Europe, the U.S. and Canada," wrote Keith Howlett of Desjardins Capital Markets in a recent report.

Howlett said that Canada's Couche-Tard, owner and operator of the Circle K chain of convenience stores in the United States, and 7-Eleven, Dallas, are the leading contenders for most large-scale assets, as well as regional players. He added that "Couche-Tard has a long track record of being disciplined with regard to acquisition price, and of integrating and operating acquired assets effectively."

Noting Couche-Tard's success in picking up many of the stores sold off by major oil--BP, Shell, ExxonMobil-- in the United States in recent years, Howlett said he expects more of the same here and abroad.

"Other U.S. oil companies, such as Valero and Hess, are now proposing to do the same (sell retail sites)," he wrote. "In Europe, the process of global oil companies exiting retail operations is still in the early stages, as it is in Canada."

Couche-Tard will be a major player in these divestitures in Howlett's view.

We would expect Couche-Tard to be interested, in particular, in the Valero retail assets in the U.S.," he wrote. "Valero has indicated it will be spinning off the retail assets to its shareholders."

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.

Steve Holtz, CSP/Winsight By Steve Holtz, Editor in Chief, CSP Daily News
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