LAVAL, Quebec -- It’s just talk at this point, but a legal issue that jeopardizes the ownership structure of the second-largest convenience-store chain in North America has the chairman considering the possibility of a sale or even hostile takeover.
“I’m a bit fatalist, but if this forces the sale of Couche-Tard, so be it,” Alain Bouchard told Montreal’s La Presse newspaper this week, according to a translated report in the Globe and Mail.
At issue is a sunset clause signed in 1995 by the four founders of Alimentation Couche-Tard—Alain Bouchard (executive chairman of the board), Jacques D’Amours (former vice president of administration), Richard Fortin (former CFO) and Réal Plourde (former COO)—that established the company as a public entity with a dual-class share structure.
The four co-founders currently own about 22.7% of the issued and outstanding shares of Couche-Tard, according to U.S. Securities & Exchange Commission documents. Most of these shares are multiple-voting shares with 10 votes each, but they are subject to a sunset provision that would remove their superior voting status when:
- the youngest of the founders turns 65 years old or passes away, whichever happens first; or
- the day when the founders hold, directly or indirectly, collectively less than 50% of the voting rights attached to all outstanding voting shares of Couche-Tard.
However, the lifespan of the sunset clause is set to expire in December 2021, leaving the business open to takeover, as reported in a McLane Co./CSP Daily News Flash.
“At that point in time, the founders will no longer have multivoting shares,” a company spokesperson told CSP Daily News. “With this in mind, Mr. Bouchard expressed his high-level thoughts and concerns for the future of Couche-Tard in his discussion with the La Presse journalist.”
The founders have two possible recourses to extend the dual-class structure. The first is to gain shareholder approval of an extension. The second is to change Quebec law.
The founders intended to put an extension vote to shareholders in September, but they pulled the vote off the table when they realized they would not have enough votes.
The founders have since turned to lawmakers but have found some roadblocks.
“It’s investors in Toronto that are blocking” the effort to keep a grip on Couche-Tard, Bouchard told the newspaper. “I’ve talked to governance people from Toronto. They’re standing high on their pedestal, and they’re lecturing us. I don’t have time to waste with those types of people.”
The comments expose a rift between Quebec government leaders, who are highly sensitive about takeovers of its homegrown companies, according to the newspaper, and the local financial district, which Bouchard said opposes his effort to keep control of the Alimentation Couche-Tard.
“This is an immense concern,” Bouchard said. “I don’t really know what we, the founders, will decide. It’s such an enormous problem that I try not to think about it.”
Couche-Tard is the leader in the Canadian convenience-store industry. In the United States, it is the largest independent convenience-store operator in terms of number of company-operated stores. As of Jan. 31, Couche-Tard’s network comprised 7,979 convenience stores throughout North America, most operating under the Circle K banner.
Its North American network consists of 15 business units, including 11 in the United States covering 41 states and four in Canada covering all 10 provinces.
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