VLO Valero Energy Corporation

Alimentation Couche-Tard Inc. agreed to buy CST Brands Inc. for roughly $3.67 billion, a merger that would sharply consolidate the convenience store industry.

The transaction, at $48.53 a share in cash, represents a 42% premium to CST's closing price on March 3, the last day prior to CST announcing it would explore strategic alternatives. It is a 2.1% premium to Friday's closing price of $47.51.

Couche-Tard said the deal is worth $4.4 billion including net debt assumed. The transaction, expected to close in early 2017, is subject to the regulatory approval and a CST shareholder vote.

Couche-Tard, which last year bought American chain Pantry Inc. for about $860 million, has been a consolidator in the convenience-store sector, seeking to combine complementary operations and eliminate overlapping costs.

The Wall Street Journal last week reported that a deal was imminent. CST has more than 1,000 stores in the southwestern U.S. as well as in New York and Eastern Canada. It was spun off from Valero Energy Corp. in 2013. Earlier this year, the San Antonio company announced it was exploring strategic alternatives amid pressure from activist shareholders. Last year, CST had $11.4 billion in revenue.

Engine Capital LP in December called on CST to explore options, saying it could attract a buyer at $50 to $55 a share. CST shares edged down 0.2% to $47.40 in premarket trading.

Couche-Tard said it also would sell certain Canadian assets of CST, which operates predominantly under the Corner Store name, after the merger for approximately $750 million.

Couche-Tard operates convenience stores in Canada, the U.S. and Europe under the Couche-Tard, Kangaroo Express, Topaz, Ingo and Circle K brands. Upon completion of the transaction, Couche-Tard said it will establish a new business unit in San Antonio with attached shared services operations.

Write to Joshua Jamerson at joshua.jamerson@wsj.com

(END) Dow Jones Newswires

August 22, 2016 08:35 ET (12:35 GMT)

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