Drive into Texas by the owner of Topaz
Published 23/08/2016 | 02:30
The Canadian firm that bought Irish forecourt operator Topaz last year, has agreed a deal to buy US petrol-station chain CST Brands for almost $4bn (€3.5bn), using its biggest-ever acquisition to expand its foothold in Texas and eastern Canada.
Alimentation Couche-Tard will pay $48.53 a share in cash for CST, according to a statement yesterday from the company, which pegged the equity value of the deal at $3.78bn. Including debt, the offer is worth about $4.4bn.
The deal brings Couche-Tard - French for "night owl" - thousands of locations in the southeastern US, Texas and New York, as well as eastern Canada, part of a push to use mergers to expand.
This is the convenience-store chain's fourth acquisition announcement this year and the largest in its 36-year history.
It eclipses the 2012 purchase of Statoil Fuel & Retail for about $2.8bn, which established a foothold in Europe.
In February, Couche-Tard completed the purchase of Topaz Energy Group, Ireland's biggest convenience and fuel retailer with 444 stations.
Three months later, Couche-Tard bought Dansk Shell's downstream retail business in Denmark.
Last year, Couche-Tard acquired The Pantry Inc. chain for about $1.7bn, including debt, adding more than 1,500 US stores.
"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 Quebec-based Couche-Tard, said in the statement.
CST's network "is in good shape", and will likely require less investment than The Pantry did, Mr Hannasch said. He didn't provide specific figures.
To finance the deal, the company 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 for about $750m 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 jumped 5.9pc to C$65.80 in Toronto having earlier reached an all-time intraday high of C$67.99. CST was little changed at $47.57, while Parkland was up 13pc at C$28.50. Parkland climbed as high as C$28.64 earlier in the session, also a record high.
The deal will generate pretax cost savings of $150m to $200m within two to three years of its completion, Couche-Tard said in a presentation on its website. It will boost earnings within the first year. (Bloomberg)