STELLARTON, N.S. -- With the agreed-upon purchase of approximately 250 gas locations in Atlantic Canada and Quebec from Shell Canada Ltd., supermarket chain Sobeys Inc. is acquiring a much sought-after retail network that speculation once put in the portfolio of Alimentation Couche-Tard Inc. or Wilson Fuels Inc.
Approximately 200 of the sites are in Quebec, with the remainder in the Atlantic provinces.
As reported in a Morgan Keegan/CSP Daily News Flash yesterday, the network Stellarton, Nova Scotia-based Sobeys is acquiring will include corporate-owned and dealer-operated locations.
Shell Canada said in May it would sell its 260 retail outlets in Quebec and the Maritimes as part of its continuing divestment in Eastern Canada. Then, Laval, Quebec-based Couche-Tard was considered the prime candidate to take the locations. Couche-Tard then operated a network of about 5,900 stores in 10 Canadian provinces under the Mac's and Couche-Tard brands and in the United States in 42 states and the District of Columbia under the Circle K brand.
"They are the big player; anyone else other than them would be a surprise," Robert James David, associate professor of strategy at McGill's Desautels Faculty of Management, told the news agency at the time.
Turo, N.S.-based Wilson Fuels was also considered to be a suitor. Wilsons Gas Stops operates its own gas stations and distributes fuel to dealers in Nova Scotia, New Brunswick, Newfoundland and Prince Edward Island. All of its company stations provide Go Store c-stores. It then operated 52 company stations, nine Wilsons Gas Stops, 42 Esso and one Shell station. It distributes to 211 dealers in Nova Scotia, New Brunswick, Newfoundland and Prince Edward Island.
"It's the type of business we're in and we have an interest in it," Ian Wilson, president of Wilson Fuels, told the Turo Daily News in May.
Other subjects of speculation included Loblaw's, Canadian Tire and Ultramar.
(See Related Content below for previous CSP Daily News coverage).
But it was Sobeys that took the prize.
A wholly owned subsidiary of Empire Co. Ltd., Sobeys owns or franchises more than 1,300 stores in all 10 provinces under retail banners that include Sobeys, IGA, Foodland, FreshCo and Thrifty Foods, as well as Lawton's Drug Stores.
A Sobeys spokesperson told Reuters that the company currently has 43 outlets in Atlantic Canada under various banners, and some dealers in Quebec that also sell gasoline. The new stations will continue to operate under the Shell banner, and Shell Canada will supply the fuel.
"We will continue to have direct operations and investments ... in the rest of the country, in certain markets," David Saint-Laurent, Shell Canada's general manager for retail, told the news agency. "It was just really strategically a good thing for us in Quebec and Atlantic."
"This is an exciting opportunity for us to grow our existing retail gas operations while leveraging our significant wholesale and convenience business to better serve our customers and support our affiliates and dealer operations," said Bill McEwan, president and CEO of Sobeys. "Shell has earned worldwide prominence and renown on the strength of its brand, innovations and technical leadership. Shell's strong fuel brand connected to Sobeys' leading retail formats and banners and the strength of the AIR MILES program will be a unique and attractive offering to customers."
Marc Poulin, president of Sobeys IGA operations business unit, added, "By adding fuel retail to our customer offering in Quebec, Sobeys becomes a strong partner for independent retailers who will benefit from our experience in collaborating with this type of business."
He added, "The participation of Shell and IGA in the AIR MILES rewards program means we will seek to leverage cross promotion opportunities to benefit our customers."
The transaction is subject to regulatory approval and customary conditions and is expected to close by the end of March 2012. Sobeys expects to use existing cash balances to finance the transaction.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.