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Mergers & Acquisitions

Couche-Tard, CrossAmerica Close Second Asset Swap Faster Than Expected

CrossAmerica gains 56 stores, Couche-Tard gets 19 properties
Photograph: Shutterstock

LAVAL, Quebec, and ALLENTOWN, Pa. —Alimentation Couche‑Tard Inc. and CrossAmerica Partners LP have entered into the second in a series of transactions under an asset exchange agreement executed in December 2018.

As part of this second transaction, Couche-Tard transferred to CrossAmerica 56 U.S. company-operated convenience stores with fuel (51 fee and five leased) having an aggregate value of approximately $50.2 million. In exchange, CrossAmerica transferred to Couche-Tard assets having an aggregate value of approximately $51.4 million. These CrossAmerica assets include the real property for 19 master lease properties.

Previously, the companies expected to exchange the assets in a series of transactions over a period of up to 24 months. They now anticipate that the remaining exchange of assets will be completed in a series of transactions by no later than the end of the first quarter of calendar year 2020, with most being completed before the end of 2019.

The closing of each asset exchange transaction is subject to closing conditions. The companies continue to expect that there will be no additional funding required as part of these transactions. CrossAmerica also expects that these transactions will be accretive to distributable cash flow.

Prior to the exchange, Couche-Tard executed dealer agreements for the Circle K stores transferred to CrossAmerica, including leases and fuel supply agreements, with independent dealers who will lease and operate the stores after the exchange. These agreements were assigned to CrossAmerica as part of the exchange. In addition, Couche-Tard and CrossAmerica entered into a subjobber agreement through which Couche-Tard will supply fuel to CrossAmerica for resale to the dealers at those 56 stores after the exchange. The existing fuel supply arrangements for the 19 master lease properties will remain unchanged.

 “We are very pleased with the process we have established to make this a smooth and fast transaction and continue to collaborate with Alimentation Couche-Tard for future ones,” said Gerardo Valencia, CEO and president of CrossAmerica. “We are implementing the process at a faster pace than we anticipated and expect to have the majority of the remaining sites exchanged by year-end.”

In December 2018, Couche-Tard announced that it agreed to transfer to CrossAmerica 192 U.S. company-operated c-stores with fuel (162 fee and 30 leased) having an aggregate value of approximately $184.5 million in exchange for assets having an aggregate value of approximately $184.5 million. These assets include the real property for 56 U.S. company-operated c-stores with fuel leased and operated by Couche-Tard from a master lease that CrossAmerica previously purchased jointly with or from CST Brands Inc., as well as 17 c-stores with fuel operated by CrossAmerica that are former Erickson Oil Freedom Valu sites in Minnesota, Michigan, Wisconsin and South Dakota, with a concentration in the Minneapolis-St. Paul region.

Laval, Quebec-based Couche-Tard’s network consists of approximately 9,900 mostly Circle K convenience stores throughout North America.

CrossAmerica, Allentown, Pa., is a wholesale distributor of motor fuels and owner and lessor of real estate used in the retail distribution of motor fuels. Its general partner, CrossAmerica GP LLC, is a wholly owned subsidiary of Couche-Tard. Formed in 2012, CrossAmerica is a distributor of branded and unbranded petroleum for motor vehicles in the United States and distributes fuel to approximately 1,300 locations and owns or leases more than 1,000 sites with a geographic footprint covering 34 states.

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