US: Couche-Tard In Mega-Deal To Acquire CST Brands

Couche-Tard has confirmed its intentions to acquire the CST Brands c-store chain, in a deal valued at around US$4.4bn (including debt).

Couche-Tard is offering $48.53 per share in cash for CST, a premium of nearly 42% to the closing price on 3 March, the day before the latter said it was exploring its alternatives. The offer has been approved by the Boards of Directors of both companies.

The deal significantly expands Couche-Tard’s presence in the North American market, given CST’s wide scale of operations in Canada and the US.  Couche-Tard noted: “With this transaction we would strategically strengthen our positioning in both the “sun belt” and the east coast of North America”.

The group also said it will sell some of CST’s Canadian assets to Parkland Fuel, in a separate deal worth $750m.  This will take place after the CST acquisition is completed, which is expected to take place in early 2017.

The assets include CST’s self-service fuelling stations, commercial and home energy business, and several company-operated stores.

NAM Implications:
  • Worth keeping in mind that Couche-Tard is one of the largest company-owned convenience store operators in the world, with more than 16,000 stores across Canada, the US, Europe, Mexico, Japan, China, and Indonesia.
  • …whilst CST Brands, Inc. is the second-largest publicly traded fuel and convenience retailer in North America, with 1,900 outlets in the US and Canada.
  • Apart from the obvious potential for suppliers, the usual prices & terms harmonisation issues apply…