SAN ANTONIO -- “We’re in the business to sell stuff and be the best, and joining our platform with the Couche-Tard global platform is really helping CST join a journey to be the world’s preferred stop for convenience and fuel,” Kim Lubel said during a conference call to offer details on Alimentation Couche-Tard Inc.’s acquisition of the company she leads.
“So as we close one chapter of our CST story, I am very happy to see this next chapter begin as our network joins with Couche-Tard on this journey as we go forward,” said Lubel, chairman, CEO and president of San Antonio-based convenience-store retailer CST Brands Inc.
CST Brands has more than 2,000 locations in the Southwest United States, along with a presence in Texas, Georgia, the U.S. Southeast, New York and eastern Canada.
After agreeing to buy CST for approximately $4.4 billion, Laval, Quebec-based Couche-Tard plans to create a new Circle K business unit based in San Antonio. “We’re excited about the talent we have here,” Couche-Tard CEO Brian Hannasch said.
Couche-Tard will rebrand the Corner Stores to its new global Circle K brand. Since it announced the initiative in September 2015, it has rebranded more than 250 locations in Europe and approximately 450 locations in the United States, predominantly in the Southeast. “We have about a three-year cycle to work through in North America,” Hannasch said.
CST spun off from San Antonio-based Valero Energy Corp. in 2013, launching a refreshed Corner Store brand in 2015.
“From the very beginning, we needed to have a brand that was iconic and separate from the [Valero] fuel brand, and I’m really excited about this opportunity to join one that’s already got great strength behind it,” said Lubel. “We had traveled far on our journey to get to our brand proposition; I think it fits very beautifully with Circle K. It’s not what the sign looks like, it’s how you deliver your service.”
Couche-Tard’s ‘Acquisitiveness’
“We have been an acquisitive company, and we’ve got a good track record of successfully integrating acquisitions and adding value above just adding site count,” Hannasch said. “It’s really about creating synergies, making one plus one equal more than two, and capturing best practices from all of these acquisitions. We think CST has a tremendous opportunity to do that. They do a lot of things very, very well. We’re sure we’ll learn a lot from them through the integration.
“We’ve got a good track record in learning from the businesses we acquire, sharing best practices, and this is one of the most unique opportunities we have to do that," he continued. "There’s a lot that is right with CST. It’s a good company, it’s a well-maintained network and operates in geographies that are very attractive to us. It has some unique things, from both a consumer-offer standpoint and back office that we think we can learn from, making the combined entity an even stronger company than the two stand-alones are today.”
Discussing the rationale for the deal, he said, “It provides us with even more scale to leverage both brand awareness with the consumer, digital opportunities, loyalty opportunities, best practices and the relationships we have with some of our core partners--the Pepsis and Cokes of the world--how to be even more meaningful with the customer using their expertise and our unique scale to bring offers to our consumers.”
Even before pursuing a deal with CST, Couche-Tard was actively looking at getting into the San Antonio market, Hannasch said. ("We’re actually still competitors for the next five months" until the deal gains approval and is completed, he said.)
The acquisition “was a great fit,” he said. “We look at our geography today--our strength is in the U.S. Southeast and the West Coast and the Midwest. We really did have a gap in Georgia, which is filled in very nice by the acquisition CST did of Flash Foods. And then we have a very small presence in Texas, one of the largest and fastest-growing markets in the United States. We have about 125 stores. When you add that to CST’s presence, it’s a very strong presence in a very fast-growing market.”
Couche-Tard operates in all 10 provinces in Canada. CST’s presence is in eastern Ontario, Quebec and the Maritimes, which will improve Couche-Tard’s density in those markets.
“There are many other small markets, like El Paso [Texas] and Albuquerque [N.M.], where combining the two networks together will go a long way to improving customer awareness and recognition of the Circle K brand,” said Hannasch.
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