ALLENTOWN. Pa., and LAVAL, Quebec -- CrossAmerica Partners LP has closed on the purchase of certain assets of Jet-Pep Inc. for a total consideration of $72 million, plus working capital and closing costs. Alimentation Couche-Tard Inc., which owns CrossAmerica, has has agreed to divest three fuel stations in Alabama to settle Federal Trade Commission (FTC) charges that Couche-Tard’s proposed acquisition of Jet-Pep would violate federal antitrust law.
The assets consist of 101 commission-operated retail sites, including 92 fee sites, five lease sites and four independent commission accounts. The locations sold nearly 91 million gallons of unbranded fuel in 2016.
Matrix provided merger and acquisition advisory services to Jet-Pep, which included valuation advisory, marketing the business through a confidential, structured sale process and negotiation of the transaction.
In addition, Circle K Stores Inc., a wholly owned indirect subsidiary of Couche-Tard Inc. and the general partner of CrossAmerica, has also closed on the purchase of certain other assets from Holly Pond, Ala.-based Jet- Pep, including a fuel terminal, associated trucking equipment and 18 other retail sites, for an undisclosed amount.
The FTC’s settlement with Couche-Tard preserves competition in Brewton, Monroeville and Valley, Ala., by requiring the convenience-store company to divest a gas station in each of those markets, according to the agreement. Without the divestitures, the FTC said, the acquisition would substantially lessen competition and lead to higher prices in these local markets.
Under the terms of the acquisition, Couche-Tard will acquire ownership or operation of 120 Jet-Pep gas stations with c-stores—18 via Circle K Stores and 102 via CrossAmerica.
- Couche-Tard ranks No. 2 on CSP's 2017 Top 202 list of the largest c-store chains in the United States.
Retail fuel markets are frequently small and highly localized, according to the FTC. The complaint alleges that without a remedy, Couche-Tard’s acquisition of Jet-Pep Inc. would reduce the number of independent market participants in each of these three local markets to three or fewer. According to the complaint, the acquisition would increase both the likelihood of successful coordination among the remaining firms and the likelihood that Couche-Tard will unilaterally exercise market power.
The consent agreement requires Couche-Tard to identify a buyer or buyers that are acceptable to the FTC within 120 days after the transaction closes and to divest the three retail fuel stations. The agreement also requires Couche-Tard to maintain the economic viability, marketability and competitiveness of each station until the divestiture is complete.
Couche-Tard agreed to another package of divestitures earlier this year to settle FTC charges in connection with Couche-Tard’s $4.4 billion acquisition of CST Brands Inc., which it completed in June. San Antonio-based CST Brands had more than 2,000 convenience stores in Texas, the Southwest, the Southeast, New York and eastern Canada.
To satisfy Canadian competitive issues, Couche-Tard sold 159 of CST's company-operated sites, independent dealers and network of commission agents in Canada to Parkland Fuel Corp., Calgary, for $753 million.
And to satisfy competitive issues raised by the U.S. FTC, Couche-Tard entered in an agreement to sell 70 company-operated sites to Empire Petroleum, Dallas, which distributes more than 1.2 billion gallons of motor-fuel products to more than 1,600 gas stations in 30 states and the District of Columbia.
To facilitate Empire’s purchase, it then entered into an agreement with Getty Realty Corp., Jericho, N.Y., providing acquisition leaseback funding to Empire, which will acquire fee-simple interests in 49 c-store and gas-station properties for $123 million under a unitary lease.
Laval, Quebec-based Couche-Tard's network includes 9,465 c-stores throughout North America, including 8,135 stores offering fuel. Through Allentown, Pa.-based CrossAmerica, Couche-Tard supplies fuel under various brands to more than 1,200 locations in the United States.
In Europe, Couche-Tard has about 2,750 c-stores offering fuel and unattended fueling sites in Scandinavia, Ireland, Poland, the Baltics and Russia. And more than 1,800 stores operate under the Circle K banner under licensing agreements in 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 stores.
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