Couche-Tard to acquire CST Brands for US$3.67 billion

Bloomberg

Alimentation Couche-Tard Inc. agreed to buy the gas-station chain CST Brands Inc. for about $3.67 billion, using its biggest-ever acquisition to expand its foothold in Texas and eastern Canada.
Couche-Tard will pay $48.53 a share in cash for CST, according to a statement Monday. The offer — valued at about $4.4 billion including debt — represents a 42 percent premium over CST’s closing price on March 3, before that company sparked takeover speculation by saying it would explore strategic alternatives.
The deal brings Couche-Tard thousands of locations in the southeastern U.S., Texas and New York, as well as eastern Canada, part of a push to use mergers to expand. This is the company’s fourth acquisition announced this year and the largest in its 36-year history. It eclipses the 2012 purchase of Statoil Fuel & Retail ASA for about $2.8 billion, which established a foothold in Europe.
“With this transaction we would strategically strengthen our positioning in both the ‘Sun Belt’ and the east coast of North America,”’ Brian Hannasch, chief executive officer of Laval, Quebec-based Couche-Tard, said in the statement.
To finance the deal, Couche-Tard will draw on available cash and a new term loan, as well as existing credit lines. It expects to complete the transaction early next year. Couche-Tard also announced a separate deal to sell some of CST’s Canadian assets to Parkland Fuel Corp. for about $750 million after the initial transaction closes. That number of stores included in that deal will depend on the outcome of a review by Canada’s Competition Bureau.
Couche-Tard shares were little changed at C$62.15 in Toronto on Aug. 19, the last trading day before the transaction was announced. The stock has climbed 2 percent this year.

Big in Texas
Couche-Tard, Canada’s biggest convenience-store company, operates more than 12,000 locations globally under brands such as Circle K and Mac’s. CST, meanwhile, has about 2,000 stores in the US and Canada, most of which are in Texas, Quebec and Atlantic Canada. Its brands include Corner Store and Dépanneur du Coin.
In February, Couche-Tard completed the purchase of Topaz Energy Group Ltd., Ireland’s biggest convenience and fuel retailer with 444 stations. Three months later, Couche-Tard bought A/S Dansk Shell’s downstream retail business in Denmark.
Last year, Couche-Tard acquired The Pantry Inc. chain for about $1.7 billion, including debt, adding more than 1,500 U.S. stores.
In the CST transaction, Couche-Tard was advised by Morgan Stanley and National Bank Financial. Faegre Baker Daniels LLP and Davies Ward Phillips & Vineberg served as legal advisers to Couche-Tard.