Couche-Tard Obtains Approval Minus 70 Sites

Just a week after the date predicted by DepQuebec for the Couche-Tard-CST mega-transaction announcement (see article here) and a few days after we published an article highlighting the real possibilities that Couche-Tard had to divest some stores (see article here), the announcement of the approval was finally made yesterday and the transaction will be officially ratified tomorrow.

The result: In order to comply with US authorities, Couche-Tard will have to divest 70 sites with gasoline in 8 US states.

To do this, the Quebec depanneur giant has reached an agreement with Empire Petroleum Partners in which the latter will grab the excess sites.

This portion of the agreement was definitely the most delicate, for had it not been for Empire, Couche-Tard could have hardly divested all these scattered sites through a piece-by-piece type of sale. The terms of sale to Empire must have been very enticing.

Of the 1250 sites that were coveted, 70 divested ones remain a relatively small number (nearly 6%) but at about US $ 4 million per site, this is still close to US $ 300 million to be subtracted from the acquisition. It is also quite clear that Couche-Tard has just reached or seriously approached its expansion limit in the southern region of the United States.

However, divesting 70 sites (and even at a discount) remains a relatively low price considering the strategic importance of this transaction.

Let’s recall that Couche-Tard is taking a giant step forward towards a leadership position in the American market, particularly in certain states, including Texas, where it had not a lot of stores (while CST originated from there, its headquarters being located in San Antonio).

With its proven ability to consolidate operations, improve efficiencies and generate synergies, Couche-Tard has gained a first-class network that provides superior volume and geographic distribution.

Who knows if, one day, this network will not also be used to sell high-quality cannabis from Quebec? Perhaps that following this transaction, Couche-Tard should now reaffect its lobby efforts towards economic ministries rather than Quebec’s public health authorities!