{"id":101704,"date":"2017-06-21T08:25:05","date_gmt":"2017-06-21T12:25:05","guid":{"rendered":"https:\/\/depquebec.com\/?p=101704\/"},"modified":"2017-06-21T08:29:19","modified_gmt":"2017-06-21T12:29:19","slug":"cstcouche-tard-still-no-approval","status":"publish","type":"post","link":"https:\/\/depquebec.com\/en\/cstcouche-tard-still-no-approval\/","title":{"rendered":"CST \/ Couche-Tard: Still No Approval"},"content":{"rendered":"<p>In<a href=\"https:\/\/depquebec.com\/en\/cst-acquisition-by-couche-tard-ftc-decision-on-monday-june-19\/\"> a recent article in<\/a> <strong>DepQuebec<\/strong>, we pointed out that, based on the <a href=\"https:\/\/www.ftc.gov\/\">FTC<\/a>&#8216;s average decision duration (as determined by <a href=\"https:\/\/www.dechert.com\/antitrust\/\">an authoritative index<\/a>), <a href=\"https:\/\/depquebec.com\/en\/chain-profiles\/alimentation-couche-tard\/\">Couche-Tard<\/a>&#8216;s acquisition of <a href=\"http:\/\/www.cstbrands.com\/en-us\">CST Brands<\/a>\u00a0was expected to be approved by Monday, June 19.<\/p>\n<p>Now we are Wednesday, June 21, and still no decision in sight.<\/p>\n<p>In fact, the <a href=\"https:\/\/www.ftc.gov\/\">FTC <\/a><a href=\"http:\/\/www.cnbc.com\/2017\/06\/19\/ftc-seeks-block-of-merger-fantasy-sport-companies-draftkings-fanduel.html\">made an announcement yesterday<\/a> to block a merger, but in a completely different file.<\/p>\n<p>Can such delays reflect the difficulties encountered in the approval process?<\/p>\n<p>According to financial analyst Keith Howlett of Desjardins Capital Market, <a href=\"https:\/\/depquebec.com\/en\/chain-profiles\/alimentation-couche-tard\/\">Couche-Tard<\/a> <a href=\"http:\/\/www.lesaffaires.com\/bourse\/revue-des-marches\/bourse-ce-qui-bouge-sur-les-marches-avant-l-ouverture-mardi\/593581\">should not be expected<\/a> to divest stores.<\/p>\n<p>However, this is undoubtedly the most tricky approval to date for the company:<\/p>\n<ul>\n<li>When <a href=\"https:\/\/depquebec.com\/en\/chain-profiles\/alimentation-couche-tard\/\">Couche-Tard<\/a> acquired Circle K in 2004, the company had no significant presence in US territory, therefore no concentration risk.<\/li>\n<\/ul>\n<ul>\n<li>When<a href=\"https:\/\/depquebec.com\/en\/chain-profiles\/alimentation-couche-tard\/\"> Couche-Tard<\/a> made an offer to buy Casey&#8217;s<a href=\"http:\/\/www.newswire.ca\/news-releases\/alimentation-couche-tard-agrees-with-the-ftc-staff-for-divestiture-relatingto-acquisition-of-caseys-general-stores-545410912.html\"> in September 2010<\/a>, the company had previously negotiated a pre-agreement with the <a href=\"https:\/\/www.ftc.gov\/\">FTC <\/a>in which it agreed to divest 25 stores.<\/li>\n<\/ul>\n<ul>\n<li>When <a href=\"https:\/\/depquebec.com\/en\/chain-profiles\/alimentation-couche-tard\/\">Couche-Tard<\/a> entered into an agreement with <a href=\"http:\/\/www.cstbrands.com\/en-us\">CST Brands<\/a> in 2016, it didn&#8217;t validate the transaction in advance with the <a href=\"https:\/\/www.ftc.gov\/\">FTC<\/a>.<\/li>\n<\/ul>\n<p>This time, the situation is potentially more problematic given that the merger of the two groups, present in several similar states like Arizona and Texas, could create pockets of store concentration that the <a href=\"https:\/\/www.ftc.gov\/\">FTC<\/a> might find intolerable.<\/p>\n<p>To get a better idea, we have tried to figure out in which areas store concentration would be the highest as part of this merger.<\/p>\n<p>Data on the <a href=\"http:\/\/corpo.couche-tard.com\/wp-content\/uploads\/2014\/06\/CST-Brands-Investors.pdf\">number of stores per state<\/a> were unveiled by <a href=\"https:\/\/depquebec.com\/en\/chain-profiles\/alimentation-couche-tard\/\">Couche-Tard<\/a>\u00a0but some figures include several states and make it difficult to get a fair picture of the situation.<\/p>\n<p>We chose instead to rely on <a href=\"http:\/\/cornerstore.com\/Home\">Corner Store<\/a> et <a href=\"http:\/\/www.circlek.com\/\">Circle K<\/a> store locators (<a href=\"http:\/\/cornerstore.com\/StoreLocator\">here\u00a0<\/a>and\u00a0<a href=\"http:\/\/www.circlek.com\/store-locator?language=en\">here<\/a>) to get a glimpse of the situation which, by the way, is nothing scientific and aims only at providing some kind of overview. We also compare it with Quebec \u00a0&#8212; a market with a fairly high number of Couche-Tard stores &#8212; to get a better assessment of store concentration levels.<\/p>\n<p>Here are the results.<\/p>\n\n<table id=\"tablepress-283\" class=\"tablepress tablepress-id-283\">\n<thead>\n<tr class=\"row-1\">\n\t<td class=\"column-1\"><\/td><th class=\"column-2\"> <center>QUEBEC <\/center><\/th><th class=\"column-3\"> <center>ARIZONA <br \/>\n(Phoenix &amp; Tucson) <\/center><\/th><th class=\"column-4\"> <center>NEW MEXICO <br \/>\n(Albuquerque)<\/center><\/th><th class=\"column-5\"> <center>TEXAS <br \/>\n(El Paso, Houston, <br \/>\nDallas, San Antonio)<\/center><\/th><th class=\"column-6\"> <center>LOUISIANA<\/center> <\/th>\n<\/tr>\n<\/thead>\n<tbody class=\"row-striping row-hover\">\n<tr class=\"row-2\">\n\t<td class=\"column-1\">Circle K or Couche-Tard<\/td><td class=\"column-2\"> <center>582 <\/center><\/td><td class=\"column-3\"> <center>532<\/center><\/td><td class=\"column-4\"> <center>55<\/center><\/td><td class=\"column-5\"> <center>125<\/center><\/td><td class=\"column-6\"> <center>150<\/center><\/td>\n<\/tr>\n<tr class=\"row-3\">\n\t<td class=\"column-1\">Corner Store (CST)<\/td><td class=\"column-2\"><\/td><td class=\"column-3\"> <center>64<\/center><\/td><td class=\"column-4\"> <center>40<\/center><\/td><td class=\"column-5\"> <center>400<\/center><\/td><td class=\"column-6\"> <center>25<\/center><\/td>\n<\/tr>\n<tr class=\"row-4\">\n\t<td class=\"column-1\">Total<\/td><td class=\"column-2\"> <center>582<\/center><\/td><td class=\"column-3\"> <center>596<\/center><\/td><td class=\"column-4\"> <center>95<\/center><\/td><td class=\"column-5\"> <center>525<\/center><\/td><td class=\"column-6\"> <center>175<\/center><\/td>\n<\/tr>\n<tr class=\"row-5\">\n\t<td class=\"column-1\">Population (est.)<\/td><td class=\"column-2\"> <center>8.5 M<\/center><\/td><td class=\"column-3\"> <center>5 M<\/center><\/td><td class=\"column-4\"> <center>1 M<\/center><\/td><td class=\"column-5\"> <center>14 M<\/center><\/td><td class=\"column-6\"> <center>4.7 M<\/center><\/td>\n<\/tr>\n<tr class=\"row-6\">\n\t<td class=\"column-1\">Estimated ratio of concentration<\/td><td class=\"column-2\"> <center>MEDIUM<br \/>\n14,604 pop\/st. <\/center><\/td><td class=\"column-3\"> <center>HIGH<br \/>\n8,389 pop\/st. <\/center><\/td><td class=\"column-4\"> <center>HIGH<br \/>\n10,526 pop\/st.<\/center><\/td><td class=\"column-5\"> <center>LOW<br \/>\n26,667 pop\/st.<\/center><\/td><td class=\"column-6\"> <center>LOW<br \/>\n26,875 pop\/st.<\/center><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n<p>This table shows that two areas are somewhat at risk, namely Albuquerque in New Mexico and Phoenix-Tucson in Arizona.<\/p>\n<p>In Arizona, this is mainly due to the relatively high number of already established <a href=\"http:\/\/www.circlek.com\/\">Circle K<\/a> stores. The transaction adds only about sixty <a href=\"http:\/\/cornerstore.com\/Home\">Corner Store<\/a> stores.<\/p>\n<p>So it seems at first glance that the combination of the two chains is very good, but that the sum of both is apparently a little high in some areas.<\/p>\n<p>Most likely, <a href=\"https:\/\/depquebec.com\/en\/chain-profiles\/alimentation-couche-tard\/\">Couche-Tard<\/a> will not have to divest a significant amount of stores if any at all, but the longer the approval period takes, the more likely the speculation of forced sale will grow.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>In a recent article in DepQuebec, we pointed out that, based on the FTC&#8216;s average decision duration (as determined by<\/p>\n","protected":false},"author":9,"featured_media":101708,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[223,1750],"tags":[818,881,1311,265,972,819,745],"class_list":["post-101704","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-newsdep","category-profiles","tag-acquisition","tag-acquisition-en","tag-concentration-en","tag-couche-tard-en","tag-cst-brands-en","tag-cst-brands","tag-ftc"],"aioseo_notices":[],"jetpack_featured_media_url":"https:\/\/depquebec.com\/wp-content\/uploads\/2017\/06\/retard.png","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/depquebec.com\/en\/wp-json\/wp\/v2\/posts\/101704","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/depquebec.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/depquebec.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/depquebec.com\/en\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/depquebec.com\/en\/wp-json\/wp\/v2\/comments?post=101704"}],"version-history":[{"count":0,"href":"https:\/\/depquebec.com\/en\/wp-json\/wp\/v2\/posts\/101704\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/depquebec.com\/en\/wp-json\/wp\/v2\/media\/101708"}],"wp:attachment":[{"href":"https:\/\/depquebec.com\/en\/wp-json\/wp\/v2\/media?parent=101704"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/depquebec.com\/en\/wp-json\/wp\/v2\/categories?post=101704"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/depquebec.com\/en\/wp-json\/wp\/v2\/tags?post=101704"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}