Business

Couche-Tard to buy U.S. convenience store chain CST for $4.4B

Alimentation Couche-Tard Inc. will buy U.S. retail rival CST Brands Inc. in a takeover deal worth $4.4 billion.

Deal must get approval of regulators before completion in 2017

Couche Tard will buy CST for $4.3 billion in an all-cash deal. (Graham Hughes/The Canadian Press)

Alimentation Couche-Tard Inc. will buy U.S. retail rival CST Brands Inc. in a takeover deal worth $4.4 billion.

The two companies had been rumoured to be working on a pact since last week, and on Monday, the Quebec-based convenience store chain confirmed their offer.

Couche-Tard will pay $48.53 US for every share of the U.S. company, a 42 per cent premium to where the shares were before takeover rumours started. CST employs 14,000 people across 2,000 locations primarily in the American southwest.

The deal is expected to be completed in 2017, but must first get the OK of regulators, especially the Competition Bureau because both chains have locations in Ontario and Quebec.

The move is in keeping with Couche-Tard's corporate strategy, which has grown steadily since 1980 in a series of small but targeted acquisitions of companies in areas where it doesn't currently operate.

"What they have learned to do very clearly is to bring the best ideas from the acquisitions to the whole group and develop them," said Karl Moore, Associate Professor at McGill University.

"It gives us an entry into Texas, a market that we've been focused on penetrating for the last three or four years," Couche Tard CEO Brian Hannasch said on a conference call with media discussing the deal.

The deal, which includes assumed debt, would also add 165 sites in Georgia and north Florida, "largely filling out a geographic void we have in the U.S. Southeast" and strengthen Alimentation Couche-Tard's footprint in Arizona and Colorado, he added.

Parkland Fuel gets some locations

In a related deal, Parkland Fuel will pay about $750 million US to acquire CST's retail business in Canada as well as a corporate presence in Montreal and a Canadian commercial and home heating business.

Couche-Tard already has an extensive network in the United States, which operates primarily under the Circle K brand of convenience stores and gas stations, as well as in Canada where it owns the Mac's and Couche-Tard chains.

With files from The Canadian Press

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