Mergers & Acquisitions

Reshaping Canada’s Retail Landscape in 5 Deals

Imperial Oil’s Esso sale greater than sum of its parts

CALGARY, Alberta -- Five fuel distributor-retailers--Alimentation Couche-Tard, 7-Eleven Canada, Harnois Groupe pétrolier, Parkland Fuel and Wilson Fuel--have each bought up a substantial portion of Imperial Oil’s 497-unit company-owned Esso retail network in Canada in a series of deals for a total of $2.8 billion Canadian ($2.08 billion U.S.).


Alimentation Couche-Tard

Through its Mac’s Convenience Stores Inc. and Couche-Tard Inc. subsidiaries, Couche-Tard is purchasing 279 sites for approximately $1.686 billion Canadian ($1.257 billion U.S.).

The sites are “the crown jewel of convenience retailing in Canada,” CEO Brian Hannasch said on a conference call announcing the deal. He said that Couche-Tard has “been pursuing these assets for close to three years.”

Of these sites, 229 are in Ontario (189 in the Toronto area, 16 in London area and 24 in the Ottawa area) and 50 are in Quebec in the Montréal area. The agreement also includes 13 land banks and two dealer sites, as well as a long-term supply agreement for Esso fuel. Of the 279 sites, 238 are owned by Imperial and 41 are leased.

The 229 sites feature a Tim Horton’s restaurant; 178 have car washes.

The sites have “minimal” overlap with Couche-Tard’s existing network, and the “acquired network couldn’t be replicated,” the company said. “At closing, Couche-Tard’s network in Canada would be comprised of more than 2,100 stores, “providing Couche-Tard with even more scale and leverage to take advantage of improved merchandising conditions.”

The deal will “provide a unique opportunity to raise brand awareness through high-profile retail sites,” as well as a “unique opportunity to operate fuel stations with strong fuel brands in areas where development occasions for such sites are very limited. {It] allows Couche-Tard to further expand its position in high-density metropolitan areas with significant growth potential,” said the company.

The back court will be rebranded to Circle K in Ontario and to Couche-Tard in Quebec.

“Since our acquisition of Silcorp in 1999, we have been looking for an opportunity for a further transformative acquisition in Canada. … Esso is a great brand and a strong partner, and we look forward to expanding our relationship with them,” said Brian Hannasch, president and CEO of Couche-Tard. “The opportunity to combine some of the strongest brands in Canada to create a great offer and experience for our customers is very exciting. The sites we would acquire represent an excellent strategic fit for our business, allowing us to expand our network and reach more fuel customers than ever before.”

Jean Bernier, Couche-Tard’s group president of global fuels and northeast operations, added “Imperial operates an attractive convenience and fuel network with excellent locations, well‑upgraded facilities and a professional team that would complement our existing business in both Ontario and Québec. These sites are among the best assets in these provinces. They have significant customer support for their convenience, coffee and car wash businesses as well as impressive fuel throughput. They are in key urban locations and in two solid growth markets. We look forward to welcoming them to the Couche-Tard family.”

Before this deal, Laval, Quebec-based Couche-Tard’s network consists of 8,006 convenience stores in North America (6,579 with fuel), including 11 in the United States in 41 states under the Circle K and Kangaroo Express (The Pantry) brands and four in Canada in all 10 provinces under the Mac’s and Couche-Tard brands.

Couche-Tard operates a retail network of 2,217 c-stores and unattended fuel sites across Scandinavia (Norway, Sweden and Denmark), Poland, the Baltics (Estonia, Latvia and Lithuania) and Russia under the Statoil and Ingo brands.

Also, independent operators run approximately 4,700 c-stores under the Circle K banner in 13 other countries worldwide (China, Costa Rica, Egypt, Guam, Honduras, Hong Kong, Indonesia, Macau, Malaysia, Mexico, the Philippines, the United Arab Emirates and Vietnam), which brings to more than 14,900 the sites in Couche-Tard’s network.

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Irving, Texas-based 7-Eleven Inc. announced that 7-Eleven Canada Inc. has agreed to acquire 148 convenience-store and fuel sites from Imperial Oil in British Columbia and Alberta, including the metropolitan areas of Vancouver, Calgary and Edmonton.

“The acquisition of these prime locations will increase our presence in western Canada and build on 7-Eleven’s already strong brand recognition in the country,” said Stan Reynolds, 7-Eleven executive vice president, chief administrative officer and CFO.

Upon the closing of the transaction, 7-Eleven will continue to market Esso-branded fuel supplied by Imperial. During a transition period, the company will remodel and convert most of the stores to 7-Eleven.

7-Eleven operates more than 500 c-stores in Canada. It operates, franchises and licenses more than 10,700 7-Eleven stores in North America and approximately 58,400 in 17 countries.

Harnois Groupe Pétrolier

Saint-Thomas, Quebec-based Harnois Groupe pétrolier (HGP) is acquiring 36 Esso sites in the Quebec City and Montreal regions.

HGP has been a retail distributor of the Esso brand since 2004. Throughout its collaboration with Imperial, HGP has contributed to the growth of the Esso network in Quebec. Upon completion of the transition, HGP’s Esso network of gas stations will increase from 39 to 130. The stations are located in the Montreal, Quebec City, Lanaudière, Laurentians, Mauricie, central Quebec, Saguenay-Lac St-Jean, Côte-Nord and Magdalen Islands regions.

It distributes products and services under the Esso and Mobil brands as well as under private labels Harnois, Pétro-T, H-Go, Diesel Express and Le magasin.

With the acquisition of the Esso sites, the company will operate a network of more than 350 stations under the Esso, Harnois and Pétro-T banners.

Parkland Fuel

Red Deer, Alberta-based Parkland Fuel Corp. has agreed to acquire Imperial’s On the Run/Marché Express convenience-store franchise system. Parkland will also acquire the real-estate assets of 17 Esso sites in Saskatchewan and Manitoba.

The deal includes the franchise agreements for approximately 80 On the Run/Marché Express c-stores operated by Esso fuel dealers and distributors.

The franchisee dealers and distributors of Esso products will continue to operate the locations. The agreement also transfers the On the Run/Marché Express trademarks to Parkland, providing Parkland with a national convenience-store brand.

“This is a tremendous opportunity for us to grow a leading convenience store brand in Canada,” said Peter Kilty, vice president of retail. “On the Run/Marché Express has strong brand equity that resonates with customers. The high quality of the On the Run/Marché Express franchisees will enhance Parkland’s strong platform for driving organic growth. This strategic acquisition positions Parkland to roll out one of Canada’s best-known brands across our national convenience-store network. The brand will enhance our focus on driving non-fuel sales growth.”

Wilson Fuel

Halifax, Nova Scotia-basedWilson Fuel is buying 17 Esso gas stations in Nova Scotia and Newfoundland.

The company already operates 50 stations under the Esso banner and the latest additions in Halifax and St. John's will also remain under the Esso name, said James Wilson, CFO of Wilson Fuel.

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