Mergers & Acquisitions

Couche-Tard to Divest 70 Sites to Acquire CST

Retailer agreed to sell the stores as a condition for FTC approval, which is expected this week

LAVAL, Quebec --Alimentation Couche-Tard Inc. has obtained clearance from the Federal Trade Commission (FTC) for the acquisition of CST Brands Inc. The companies expect the transaction to close June 28. Following the review by the FTC, Couche-Tard has agreed to sell 70 sites to Dallas-based Empire Petroleum Partners LLC.

As per the terms of the merger agreement, announced in August 2016, CST stockholders will receive $48.53 in cash per share, without interest, representing a total enterprise value of approximately $4.4 billion, including the assumption of net debt.

CST Brands, San Antonio, is one of the largest independent retailers of motor fuels and convenience merchandise in North America. It has more than 2,000 locations throughout the southwestern United States, Georgia, Florida, New York and eastern Canada.

In the United States, brands include Corner Stores, Nice N Easy Grocery Shoppes and Flash Foods. In Canada, brands include Depanneur du Coin and Corner Stores, and CST is the exclusive provider of Ultramar fuel. CST also owns the general partner of Allentown, Pa.-based CrossAmerica Partners LP, a master limited partnership (MLP) that distributes branded and unbranded road transportation fuel to about 1,200 locations in the United States.

Once this transaction is completed, Couche-Tard would control the general partner of CrossAmerica Partners and would own 100% of CrossAmerica’s incentive distribution rights (IDRs) and approximately 21% of CrossAmerica’s outstanding common units.

Empire Petroleum is a motor-fuels distributor of brands that include Chevron, Shell, Valero, ConocoPhillips, Marathon, CITGO, Texaco, Sunoco, BP, Exxon, Mobil and Gulf. It distributes motor-fuel products to more than 1,400 gas stations in 27 states in the mid-Atlantic, Southeast, Southwest and Midwest. 

Couche-Tard has worked closely with the FTC and the Canadian Competition Bureau with the aim of obtaining clearance for the deal. To that end, Couche-Tard has agreed to divest certain sites in the United States and continues to work with the Competition Bureau to obtain clearance for the transaction in Canada, which is expected to be cleared and announced later this week.

Couche-Tard expects the divestiture transaction to close at the end of August or in early September. Until completion of the divestitures in accordance with the U.S. consent decree, the sites would be operated in the ordinary course of business by Couche-Tard. As a result, Couche-Tard would be adding 1,178 sites to its U.S. network in several states, including Arkansas, Arizona, Colorado, Florida, Georgia, Louisiana, New Mexico, New York, Oklahoma and Texas.

Laval, Quebec-based Couche-Tard's network includes 8,081 convenience stores throughout North America, including 6,710 stores selling motor fuel, mostly under the Circle K, Kangaroo Express, Mac's and Couche-Tard banners. 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.

In Europe, Couche-Tard operates a broad retail network across Scandinavia, Ireland, Poland, the Baltic States and Russia through 10 business units. Its network includes 2,766 stores, most of which offer road transportation fuel and convenience products, while the others are unmanned automated fuel sites that only offer road transportation fuel.

In addition, under licensing agreements, close to 1,700 stores are operated under the Circle K banner in 13 other countries and territories worldwide (China, Costa Rica, Egypt, Guam, Honduras, Hong Kong, Indonesia, Macau, Malaysia, Mexico, the Philippines, the United Arab Emirates and Vietnam), which brings the total network to more than 12,500 stores.

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