Mergers & Acquisitions

Couche-Tard Sells CrossAmerica Partners

Also enters into asset exchange for portion of U.S. dealer business, CST Fuel Supply

LAVAL, Quebec, and ALLENTOWN, Pa. — Following a strategic review, Alimentation Couche-Tard Inc. has sold all of its ownership interest in CrossAmerica to investment entities controlled by Joe Topper, the founder of CrossAmerica, for an undisclosed amount.

Formed in 2012 as Lehigh Gas Partners, CrossAmerica, a master limited partnership, is a wholesale fuels distributor and convenience-store lessor in the United States. As part of Couche-Tard's acquisition of CST Brands Inc. in July 2017, Couche-Tard acquired 100% of the membership interests of CrossAmerica GP LLC, the general partner of CrossAmerica, 100% of the incentive distribution rights in CrossAmerica and approximately 6.9 million of CrossAmerica limited partner units.

The Allentown, Pa.-based company distributes fuel to approximately 1,300 locations and owns or leases more than 1,000 sites. With a geographic footprint in 31 states, CrossAmerica has relationships with brands such as ExxonMobil, BP, Shell, Chevron, Sunoco, Valero, Gulf, CITGO, Marathon and Phillips 66. It ranks as one of ExxonMobil's largest distributors by fuel volume in the United States.

“The sale of our interest in CrossAmerica benefits both parties and allows each to focus on growing their core businesses. As we complete the remaining exchange of assets with CrossAmerica, we will continue to look for opportunities for future exchanges which create value for our shareholders and CrossAmerica's unit holders,” said Brian Hannasch, president and CEO of Couche-Tard.

“I am honored to once again lead CrossAmerica and to work with this exceptional team,” said Joe Topper, chairman of CrossAmerica. “The announcement of this most recent exchange of assets with Couche-Tard shows the tremendous growth opportunities for CrossAmerica and our ability to continue to increase value for our unit holders.”

“At this time, we anticipate maintaining our current distribution policy, distribution coverage and leverage ratio targets that have been outlined over the past few quarters,” said Topper, who becomes the new chairman of CrossAmerica GP. “I am excited for the future of the Partnership. In the coming weeks and months, I and the management team look forward to sharing in more detail with our unitholders our strategy and goals for CrossAmerica.”

Topper has more than 30 years of management experience in the wholesale and retail fuel distribution business. In 1987, Topper purchased his family’s retail fuel business and founded Dunne Manning Inc., formerly Lehigh Gas Corp., which operates approximately 200 sites formerly operated by Lehigh Gas-Ohio LLC. This group of sites includes Hy-Miler, Express Lane, Uni-Mart, Joe’s Kwik Marts, Rocky Top Markets, Zoomerz, Top Star and Choice Tobacco Outlets.

The CrossAmerica interests sold consist of 100% of the general partner interest, 100% of the incentive distribution rights and approximately 7.5 million CrossAmerica limited partner units. The transaction closed Nov. 19.

Asset Exchange

In connection with this deal, Couche-Tard and CrossAmerica also announced an agreement for an additional asset exchange transaction between the two organizations. This new exchange includes a select portion of Couche-Tard's U.S. dealer business and CrossAmerica's ownership interest in CST Fuel Supply LP.

Couche-Tard will transfer U.S. wholesale fuel supply contracts covering 387 sites and 45 fee and leasehold properties to CrossAmerica; and CrossAmerica will transfer its 17.5% limited partner interest ownership in CST Fuel Supply LP to Couche-Tard. Couche-Tard will retain its dealer sites in California and those operated through its RDK joint venture, as well as other strategic fuel wholesale assets across different parts of the country.

Laval, Quebec-based Couche-Tard’s network consists of about 9,900 mostly Circle K convenience stores in North America. Couche-Tard is No. 2 in CSP’s2019 Top 202 ranking of c-store chains by number of U.S. retail outlets. CrossAmerica is No. 106.

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