Couche-Tard Nears Deal to Buy CST
August 15 2016 - 9:49PM
Dow Jones News
By Dana Mattioli, Dana Cimilluca and Ben Dummett
Circle K owner Alimentation Couche-Tard Inc. is nearing a deal
to buy CST Brands Inc. in a big move to consolidate the
convenience-store industry.
Couche-Tard is the likely winner of an auction of CST, according
to people familiar with the matter. It isn't clear what the
Canadian company would pay, but CST has a market value of $3.4
billion, meaning a deal is likely to be valued around that level or
higher.
A transaction could be announced as soon as this week, one of
the people added -- though as always, a deal may not be reached or
another of the bidders that has been vying for CST could
prevail.
CST is a fuel and convenience-store chain that operates
predominantly under the Corner Store name, with 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 had hired bankers
to explore strategic options amid pressure from activist
shareholders.
Last year, CST had $11.4 billion in revenue. It is the
second-largest publicly traded fuel and convenience retailer in
North America, the company says.
CST shares were little changed Monday at $44.32. The stock is up
13% this year, fueled in part by hopes of a sale.
Engine Capital LP in December called on CST to explore options,
saying it could attract a buyer at $50 to $55 a share. The activist
investor criticized CST's management and its costs compared with
those of rivals like Couche-Tard. In March, Engine and a second
activist, JCP Investment Management, struck a deal to add two new
directors to the board amid the strategic review.
Then in May, CST agreed to sell around 80 stores in California
and Wyoming to 7-Eleven Inc. for $408 million.
Couche-Tard has been a consolidator in the convenience-store
sector, seeking to combine complementary operations and eliminate
overlapping costs. Last year, the company bought American chain
Pantry Inc. for about $860 million.
Couche-Tard has a market value of more than 34 billion Canadian
dollars ($26 billion). It operates convenience stores in Canada,
the U.S. and Europe under the Couche-Tard, Kangaroo Express, Topaz,
Ingo and Circle K brands.
(END) Dow Jones Newswires
August 15, 2016 21:34 ET (01:34 GMT)
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